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Deposition from SWIM Challenges Case No. 92-3038, 92-3039, and 92-3040 |
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Deposition from SWIM Challenges Case No. 92-3038, 92-3039, and 92-3040 |
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P R O C E E D I N G S
* * *
THE REPORTER: Ladies and gentlemen,
we're back on the record.
* * *
LONNIE L. JONES, Ph.D.,
having been first duly cautioned and sworn upon
his oath to tell the truth, the whole truth
and nothing but the truth, testified as follows,
to wit:
* * *
E X A M I N A T I O N
* * *
BY MS. STINSON:
Q. Would you please state your name and
address.
A. My name is Lonnie Jones. I live at
6866 Morgan Road, Bryan, Texas.
Q. That's your home address?
A. Yes.
Q. What's your business address?
A. Department of Agricultural Economics,
Texas A & M University, College Station, Texas.
Q. And how long have you been at Texas A & M?
A. About 25 years.
10
Q. What is your position there?
A. I'm a professor of Agricultural Economics.
Q. During that 25 years or so, have you had
intervening positions as well as visiting positions
elsewhere?
A. Yes, one. In 1979, I moved to Austin and
worked for about two years with the State Property
Tax Boards. At the time I went there, it was called
the School Tax Assessment Practices Board. The name
was later changed to the State Property Tax Board.
This was an interagency agreement between
Texas A & M University and that State agency, which
I was, in effect, rented out to go over there and
work. I was still paid by Texas A & M.
Q. Within the field of agricultural economics,
do you have any particular subspecialties?
A. I specialize in what is known as resource
economics and economic impact analysis.
Q. What is resource economics?
A. Resource economics deals with the economic
decisions related to management of natural and human
resources.
Q. You have been retained, isn't it true, by
the U.S. Department of Justice with regard to what
I'll call the Everglades litigation?
11
A. Yes, I've been retained by the U.S.
2 Department of Justice to assist them with the
3 Everglades cleanup and restoration project, I think,
4 usually referred to as the SWIM project.
5 Q. When were you retained?
6 A. I can't remember the exact date. It was
7 when the -- it was in the spring of 1992 when they
8 first contacted me.
9 Q. Who contacted you?
10 A. Mr. Keith Saxe and Mr. Bob Rosenberg.
11 Q. Do you know why you were contacted?
12 A. I'm not exactly sure of what the chain of
13 events were that led to them acquiring my name.
14 Q. What have you been retained to do?
15 A. They have asked me to assist them with
16 evaluating the work that's being done for the
17 South Florida Water Management District relating to
18 the SWIM plan in the area of secondary impacts of
19 the plan.
20 Q. You say "evaluating the work being done for
21 the Water Management District." What work is that?
22 A. Initially the request was to review and
23 evaluate the work being done by Hazen & Sawyer, the
24 contractor to the South Florida Water Management
25 District, with a request to be sure that the work
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1 was complete, that all data was considered and it
2 was a state-of-the-art analysis or economic impact.
3 Q. What did you do beginning in the spring of
4 '92 to carry out your duties?
5 A. The first thing we did was to receive some
6 documents of the SWIM plan, as well as some other
7 documents, and to review those to begin to try to
8 understand the problem, the issues involved in it.
9 Q. And then what?
10 A. I guess the next step is we met with
11 Hazen & Sawyer -- Dr. Grace Johns with
12 Hazen & Sawyer.
13 Q. Do you remember when you did that?
14 A. The first meeting?
15 Q. Yes.
16 A. I don't have an exact recollection of the
17 date. It was probably in -- I'm going to say in
18 April or May of 1992.
19 Q. Who met with her?
20 A. Dr. Ron Lacewell was at that meeting,
21 Dr. Dan Bromley, and me. That's -- and the
22 Hazen & Sawyer's staff. Those are the only ones I
23 recall in the meeting.
24 Q. What was the purpose --
25 A. Excuse me. Mr. Saxe was there.
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1 Q. What was the purpose of that meeting?
2 A. It was basically to gather information from
3 Dr. Johns as to her methodology and approach on
4 conducting the impact analysis.
5 Q. Did you provide any information to her or
6 suggestions on approach?
7 A. At that meeting I didn't provide any
8 information. There may have been suggestions that
9 came up in the normal course of discussion.
10 Q. At that point, where was she in terms of
11 developing the study, in the very preliminary stages
12 or what?
13 A. Fairly preliminary. I think she had sent
14 out a questionnaire to the producers in the area.
15 She was working on a questionnaire to some of the
16 other Ag-related industries in the EAA, suppliers of
17 inputs to farmers.
18 She was still -- I don't think there was
19 anything at that time firm or set in concrete as to
20 the terms of her overall methodology. She was still
21 looking at a lot of different factors in terms of
22 the appropriate approach in handling those.
23 Q. Had she selected the FLIPSIM model at that
24 time to use?
25 A. I don't really recall whether she had or
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1 she was in the process of acquiring it at that first
2 meeting.
3 Q. Did you talk with her about the use of
4 FLIPSIM, whether that was a good approach or not?
5 A. I didn't. Personally I don't recall
6 discussing with her whether or not to use FLIPSIM.
7 We talked more in terms of the basic
8 methodology or the study than we did for any
9 particular tools of analysis.
10 Q. Did you discuss with her the concept of
11 discussing model size farms?
12 A. Model size?
13 Q. Or model farms. Excuse me.
14 A. I believe at that time, she did tell us
15 that she was planning to look at a stratification of
16 the EAA into belts, which basically run north to
17 south through the EAA, and to stratify the EAA by
18 yield belts.
19 A. Did you comment on her decision to do that?
20 A. I may have. I don't -- it seemed like a
21 good idea to me at the time.
22 Q. Do you still believe that that's a good
23 idea, good approach?
24 A. Yes.
25 Q. After meeting with Hazen & Sawyer in April
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1 or May, what did you then do?
2 A. There was a meeting in the funding council
3 somewhere about that same time. As a matter of
4 fact, I can't tell you today precisely whether --
5 which came first, the Hazen & Sawyer meeting or the
6 funding council meeting. I'd have to look at some
7 records for that.
8 But about that same time, there was a
9 meeting of the funding council. Mr. Saxe asked --
10 that, as I recall, his request was that either
11 Dr. Lacewell or I come to that funding council
12 meeting because they were going to discuss
13 Hazen & Sawyer's ongoing work; and I was available,
14 so I attended the meeting.
15 Q. What was discussed at that meeting, and did
16 you make any presentation?
17 A. No, I did not.
18 Q. You just listened in?
19 A. Yes.
20 Q. What was discussed at that meeting?
21 Q. There was -- they discussed -- Dr. Johns
22 gave a presentation at that time of her general
23 approach to the economic impact model. There was
24 discussion by the board and other members, funding
25 council and other members, other people that were
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1 there.
2 At that time, she also presented a request
3 and a proposal to extend the study to look into the
4 benefits of the Everglades; and that request for an
5 extension was subsequently approved by the funding
6 council.
7 Q. That was a proposal which came from
8 Hazen & Sawyer?
9 A. Yes.
10 Q. What was the rationale for that, that she
11 expressed at the meeting?
12 A. I don't recall.
13 Q. Was an entity or individual mentioned who
14 would do that part of the study?
15 A. I don't remember any entity being mentioned
16 at that funding council meeting.
17 Q. Do you know who, in fact, did that study?
18 A. It was subcontracted, as I understand, to
19 the National -- let me get this name right. NRDA,
20 National Resource Damage Associates, or a title to
21 that effect.
22 It was actually done by Dr. Hanneman and
23 another -- and doctor -- well, I know this
24 gentleman. I've drawn a blank on his name.
25 Q. If you think about it later, tell me.
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1 A. Okay.
2 Q. Are these people in California; is that
3 correct?
4 A. Yes.
5 Q. Do you know how it came to be that those
6 folks were selected?
7 A. No, I don't know that, the process that
8 Hazen & Sawyer used in selecting them.
9 Q. Did you have any interaction with those
10 people in doing the benefits part of the analysis?
11 A. No, I didn't.
12 Q. Did anyone, to your knowledge, on behalf of
13 the U.S. Department of Justice?
14 A. I can't -- I'm not absolutely certain of
15 this, but I think that Dr. Teofilo Ozuna, who was
16 also retained by the Justice Department, may have
17 interacted with them either during the process of
18 the study or immediately after that. I'm not sure
19 if they had published their draft report at the time
20 the he first interacted with them; but I think that
21 he did, at some point, communicate with them
22 directly.
23 Q. So you went to a meeting with
24 Hazen & Sawyer and you went to a funding council
25 meeting and listened in and then what?
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1 A. Well, there followed some interaction with
2 Grace Johns; and some questions that she would have
3 concerning some particular variables. I did some
4 work at the request of Counsel, also, to provide the
5 Justice Department some information on some of the
6 issues and variables that were being considered in
7 the overall analysis.
8 Q. What variables did Hazen & Sawyer have
9 questions about that you had input into?
10 A. Two that I recall. The first one she was
11 wrestling with, the problem of identifying the
12 impacts -- secondary impacts that would rest
13 specifically with the EAA, the immediate local area,
14 as opposed to those that might leak out or reside in
15 a more remote area, such as, maybe another part of
16 Florida or somewhere else because of either the
17 expenditure of consumer's income or the purchase of
18 inputs that are not sold locally.
19 We had done and recently -- I say
20 recently -- within the last two years, had been
21 involved in working with the Texas Attorney
22 General's office in a case between -- it was a
23 lawsuit between the State of Texas and New Mexico,
24 water allocation between New Mexico and Texas on the
25 Pecos River.
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1 I had done some work at that time to look
2 at how much of the secondary impacts from New Mexico
3 might flow back to Texas as opposed to how much will
4 be contained locally and compared to how much may go
5 somewhere else.
6 And she asked me if I would send her
7 whatever material I had done there in that study,
8 and I did send that to her.
9 Q. Was that material used by her, do you know,
10 in her report?
11 A. In reviewing her report, I have not found
12 any indication that it was used directly.
13 Q. When you say, "she was struggling with the
14 issue of secondary impacts in the EAA as opposed to
15 elsewhere," when you say "EAA," do you include all
16 of Palm Beach County?
17 A. I would, yes.
18 Q. That was one of the questions. You said
19 there were a couple that -- do you recall?
20 A. At a later date, she was, also, concerned
21 about looking at a scenario projection assuming that
22 farmers in the -- that the federal support program
23 for sugar was eliminated.
24 And specifically what she wanted to look at
25 was what would happen -- what would be the price of
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1 sugar in the United States if all industrialized
2 countries in the world went to a free market and a
3 free trade relationship rather than the relationship
4 that exists at the present.
5 Q. And did you provide any input
6 on that question?
7 A. She asked me if I would review what
8 literature I had or could obtain, and see if I could
9 draw together some speculation as to what that price
10 level might be. And I did that, and I communicated
11 that to her in writing.
12 Q. What were your conclusions in that regard?
13 A. After reviewing several reports, different
14 people -- professionals who had attempted to project
15 that scenario, the -- well, the conclusion -- do you
16 mean in terms of -- I'm not quite --
17 Q. Either a general or specific conclusion
18 about the effect on the price or the effect on --
19 A. Okay. Well, the general conclusion, as far
20 as price is concerned, is that I think my statement
21 to her was that it would appear from the review of
22 these studies that the price of sugar in the
23 United States would probably reach an equilibrium at
24 some point in the future between 14 and 16 cents per
25 pound.
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1 Q. You say you communicated that to
2 Grace Johns in writing. Was that by a report or
3 letter?
4 A. It was a memo with a -- it was a long memo.
5 Q. And when was that, more or less?
6 A. I would say that was probably in the month
7 of June 1992. That's as close as I can get.
8 Q. Do you recall what literature you reviewed
9 to come to that conclusion?
10 A. Yes. There was a study done in 1995 --
11 Q. '85?
12 A. '85. I'm sorry. -- (continuing) by
13 Ron Knutson and Andy Schmitz and I think it's
14 John Earley that projected an estimate.
15 There were other studies that were studied
16 by Gordon Rausser which they looked at the sugar
17 program.
18 There was a report from the Sugar &
19 Sweetner Division of the ERS, U.S. Department of
20 Agriculture.
21 Q. Do you recall what edition of the
22 Sugar & Sweetner Report?
23 A. No. It was not a part of their normal
24 series. This was a special report, and I'm not
25 exactly -- I don't recall exactly what the title of
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1 it was, but it was done by Peter Buzzanell and
2 Ron Lord.
3 Then there was a Ph.D. dissertation
4 recently out of Purdue by a Mr. Greer, who had also
5 looked at liberalization of trade in sugar.
6 MS. STINSON: Keith, I have been
7 through these documents and the
8 reports he's mentioned, I recollect.
9 I do not recollect seeing the memo he
10 has referred to.
11 MR. SAXE: So far as I know, it
12 should have been produced.
13 MS. STINSON: If it wasn't, we
14 can --
15 MR. SAXE: I don't have a
16 privileged list in front of me to
17 consult; but I don't, at this point,
18 recall having withheld the document.
19 I don't -- I really can't, you
20 know, tell you. We could follow up on
21 it. If you want to take a break, I
22 could call back and see.
23 MS. STINSON: Well, maybe at noon
24 or something, we can do that.
25 MR. SAXE: Sure.
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1 Q. (By Ms. Stinson) Were there any other
2 variables that you provided input to Grace Johns, to
3 your knowledge, or to your recollection?
4 A. I talked to her on a number of occasions
5 about selection of a model for estimating secondary
6 impacts, for estimating indirect and indecent
7 impacts.
8 Q. What was your input into that discussion?
9 A. Well, I basically asked her what she had
10 been looking at and what she had available and what
11 she was going to use.
12 Q. And what did she determine to use?
13 A. She selected the RIMSII model from the
14 Bureau of Economic Analysis, U.S. Department of
15 Commerce.
16 Q. Do you have an opinion as to whether that's
17 the appropriate model to use?
18 A. I think it is appropriate, yes.
19 Q. Do you believe the multipliers that she
20 selected from that analysis were appropriate?
21 A. I had reviewed the RIMS printout, and I
22 think she picked the right ones.
23 Q. Anything else?
24 MR. SAXE: Objection to form.
25 Q. (By Ms. Stinson) You can answer anyway.
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1 MR. SAXE: If you understand the
2 question, you can answer it.
3 A. I assume you're asking me if there was
4 anything else that we talked about that I had input
5 on on the analysis?
6 Q. (By Ms. Stinson) Right.
7 A. Those were the three things that are -- or
8 however many there were -- that I remember
9 specifically talking with her about. There were a
10 number of, I guess, other things that we talked
11 about, in general, along with other participants;
12 but I don't know that I would say that I have any
13 particular specific input into those.
14 Q. Let me back up a minute. Have you ever
15 testified as an expert witness?
16 A. Yes.
17 Q. Can you tell me the circumstances?
18 A. I most recently testified in hearings
19 before the Texas Water Commission on behalf of a
20 company; the name is TexCor, Incorporated.
21 Q. What was your testimony?
22 A. My testimony related to the economic
23 impacts of NORM, N-O-R-M, which stands for Naturally
24 Occurring Radioactive Material, a disposal facility
25 that was proposed to be located at Brackettville,
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1 Texas in Kinney County, Texas; and I was testifying
2 as to the economic impacts of that facility on the
3 City of Brackettville in Kinney County.
4 Q. Was it TexCor who wanted to put the
5 facility in?
6 A. Yes.
7 Q. Was that a judicial-type proceeding or more
8 of a legislative-type?
9 A. It would be judicial. As I understand it,
10 there had been a challenge filed by a local group
11 of -- I think it's called CARE, Communities Against
12 Radioactive Environments and --
13 Q. Were you qualified as an expert witness?
14 MR. SAXE: Objection to form.
15 Q. (By Ms. Stinson) If you know what I mean
16 by that.
17 A. The way this transpired was that we had
18 done a study for TexCor in 1988 for another purpose.
19 It was for their purpose of acquiring a permit
20 through the -- at that time, the Texas Department of
21 Health. The jurisdiction for this type facility was
22 later transferred to the Texas Water Commission and
23 we had done that study for them and given it to them
24 and, I presume, they had used it in their normal
25 course of acquiring a permit.
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1 Then later in 1992 -- and this is winter
2 and early spring of 1992 -- they contacted me again
3 and this challenge had been and requested I testify.
4 Q. Was it a proceeding where you were on the
5 stand and lawyers asked you questions, that type of
6 proceeding?
7 A. It was in the Brackettville Community
8 Center, and there were two attorneys -- no, four
9 attorneys for the CARE group and then TexCor had an
10 attorney from Austin.
11 Q. And in your testimony on the stand, was
12 there was an exchange where they went through your
13 qualifications and then one of the lawyers said, "I
14 proffer him as an expert witness," something to that
15 extent?
16 A. Yes.
17 Q. In what field were you proffered as an
18 expert?
19 A. Economic impact analysis.
20 Q. And were you accepted as an expert in that
21 field?
22 A. Yes.
23 Q. Have you done any other testimony in
24 judicial-type proceedings?
25 MR. SAXE: Objection to form.
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1 Counsel, I'm not sure whether the
2 witness understands what you mean by
3 "judicial-type proceedings."
4 MS. STINSON: He can tell me if
5 he doesn't understand the question.
6 A. Well, there was a follow-up, a second
7 hearing related to this same subject in Austin.
8 Again, attorneys were there for both sides.
9 There was cross-examination and so forth. I think
10 that's all related to that case.
11 Several years ago, we did a study of the
12 economic impacts of land subsidence in the Houston,
13 Harris County and Galveston area. Following the
14 publication of that study -- and that study was --
15 it was a part of my normal activities of Texas A & M
16 University.
17 But following the publication of that,
18 there was a lawsuit that was filed by -- I think it
19 was a class-action suit -- by a group of homeowners.
20 It was filed against Friendswood Development
21 Corporation, which is -- they're a developer in the
22 Harris area -- for negligence in the development of
23 some certain subdivisions there. And I was asked to
24 testify in court in Houston as to the economic
25 impacts. Again, I was offered as an expert witness
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1 there.
2 Q. (By Ms. Stinson) Tell me a little bit
3 about that study. What were you looking at?
4 A. The land subsidence study?
5 Q. Yes.
6 A. The problem there is one of -- it was a
7 problem of overdrafting in an underground reservoir,
8 water, pumping water. That whole area -- the whole
9 coastline of Texas, in fact, is underlying by --
10 it's very nice aquifer. It has good clean water.
11 You an use it right out of the ground without having
12 to treat it. Add a little chlorine, I guess, is
13 what they do.
14 The aquifer is unique in the sense that
15 it's -- as you look at it vertically through the
16 aquifer, you have a layer of sand and then you'll
17 have a layer of clay, a clay lens that runs
18 throughout the aquifer. This all, I understand, is
19 from the USGS people that I was working with.
20 The problem that they had -- and this goes
21 back to -- I guess it was first noticed back in the
22 40's -- is as they draw water out of this aquifer,
23 if you draw down -- as long as you're drawing water
24 and drying out the sand part of the formation, you
25 don't have much of a problem. But once you draw
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1 water past this clay lens and allow it to dry, it's
2 a very elastic soil and it collapses.
3 So what was happening was they were
4 overdrafting the aquifer, drawing the water table
5 down, as these clay lenses collapsed, because of the
6 overburden of the soil and surface on top, they were
7 sinking.
8 And there had been some homes that were
9 built there that were -- wound up in the Galveston
10 Bay, offshore; and someone said in violation of
11 Coast Guard regulations, they weren't equipped to
12 navigate the Trinity Bay.
13 But this was happening throughout the area;
14 and so we got involved in it to take a look at what
15 the -- this is what the resource economists call an
16 "externality." In other words, you're performing
17 some certain activity; and that activity is imposing
18 a cost on another party or another factor.
19 We went in there to look at what the
20 magnitude of the externalities were, what were the
21 external costs related to this pumping.
22 We estimated those and then we compared the
23 total cost -- the direct cost of pumping water,
24 added to that the external costs from the loss of
25 use of property and we compared that to the cost of
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1 surface water, which directly was more expensive;
2 but we found that if you quantify it and added the
3 external costs to the direct pumping costs, then
4 they far exceeded the alternatives, source of
5 surface water.
6 Now, that's the study. The suit, of
7 course, is something else.
8 Q. But did your testimony in that suit relate
9 to your work on that study?
10 A. Yes.
11 Q. Is anything in that study transferable or
12 relevant to your work on the Everglades?
13 A. There are no numbers or values or estimates
14 that I would say are directly transferable. I would
15 say that in terms of general concept, that there is
16 a theoretical or conceptual transference, in that,
17 not unlike the Houston area, it would appear that
18 there is a problem of externality apparent in the
19 case relating to the Everglades.
20 Q. What is that relevance of that
21 relationship?
22 A. As I understand it from the biologists and
23 the soil scientists and other who have put together
24 the foregoing documents that I have studied, that
25 the problem in the Everglades, in relationship to
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1 agriculture, is one of a pollution runoff or, in
2 particular, phosphorus runoff from the farming area
3 into the Everglades, which is changing the ecosystem
4 of the Everglades. And that, we would call in
5 economics, resource economics, an externality.
6 Q. Well, in your work on the Everglades, have
7 you looked at quantifying the externality involved
8 there?
9 A. No, I have not.
10 Q. But that essentially is what you did in the
11 Galveston study, correct?
12 A. Yes.
13 Q. Has anyone, to your knowledge, quantified
14 the externalities that you've mentioned in the
15 Everglades?
16 A. I believe that was the attempt of the South
17 Florida Water Management District of what they had
18 in mind when they approved the extension requested
19 by Hazen & Sawyer for the well, let me back up here
20 a minute.
21 That would be a part of that process of
22 quantifying externalities with the -- what they did
23 in terms of trying to estimate the value of the
24 Everglades.
25 Q. Are you referring to the so-called benefits
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1 report?
2 A. Yes. That, I wouldn't -- I wouldn't say
3 that that is a complete answer to that question, but
4 that would be a part of the process of getting
5 there.
6 Q. Has anyone, to your knowledge, done a
7 complete analysis of the quantification of the
8 externalities in the Everglades?
9 A. Not to my knowledge, no.
10 MR. SAXE: Counsel, it's 10:00. I'd
11 like to take a short break.
12 (WHEREUPON, a recess was taken.)
13 Q. (By Ms. Stinson) I had just asked you
14 about the analysis of the externalities in the
15 Everglades. To your knowledge, is anyone now doing
16 a complete quantification of the externalities
17 related to pollution runoff into the Everglades?
18 A. Do you mean an economic quantification?
19 Q. Yes. Yes.
20 A. I don't know of anyone at this point in
21 time who is trying to estimate the dollar value or
22 the dollar loss of the Everglades ecosystem from
23 this specific action, from this specific case that's
24 covered by the SWIM plan.
25 Q. You qualify that somewhat. Do you know
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1 anyone who is doing some kind of economic analysis
2 or quantification?
3 A. No.
4 Q. What was the purpose for your work
5 regarding the externalities of soil subsidence in
6 the Houston/Galveston area?
7 A. It was a purpose that's consistent with the
8 mission of Texas A & M University and the Texas
9 Agricultural Experiment Station and, that is, to
10 conduct research and provide information on issues
11 and problems to assist decision-makers throughout
12 the State.
13 Q. When you say "assist decision-makers," in
14 what regard, assist them to do what? What was the
15 decision that needed to be made?
16 A. This was a perceived problem by a number of
17 people. We -- it was actually -- the project was
18 actually funded by the Texas Water Resources
19 Institute, which specifically funds research and
20 education and is oriented toward water problems in
21 the State of Texas.
22 And it had, through whatever communication
23 channels, had been listed as a top priority research
24 project by that institute. We submitted a project
25 proposal to them to attempt to quantify those
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1 externalities and do the comparison, as I testified
2 to earlier; and that project was approved and --
3 Q. Well, was there some -- you mentioned that
4 you were comparing the cost of surface water to the
5 cost of pumping out the ground water and launching
6 houses.
7 Was there some public policy decision that
8 needed to be made in that regard that your research
9 was designed to assist?
10 A. Yes, in the case of as in most
11 externalities.
12 Q. I guess my question is: What is the public
13 policy decision that needed to be made in that
14 instance?
15 A. Well, let me answer that by telling you
16 what subsequently was made.
17 Q. All right.
18 A. Following the work that we did, as well as
19 a lot of work done by others, the Texas legislature
20 created what is called the Harris/Galveston
21 Subsidence Control District, and they're empowered
22 to monitor and approve permits for wells into the
23 aquifer, to manage well spacing, and a number of
24 other -- to tax, and a number of other
25 administrative authorities in order to stop the
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1 problem.
2 Q. Was there also a provision made for
3 developing surface water, supplies of water to
4 alleviate the problem?
5 A. That has been done, yes. They are now
6 using surface water from several available sources,
7 sources which were and have been available for some
8 time.
9 Q. To -- in those types of public policy
10 decisions, as to, I guess, allocation or use of
11 resources, as a resource economist, is it important
12 to understand the costs and the externalities and
13 benefits of those actions?
14 A. In this particular case, I think it was
15 helpful in the Houston case to be able to show that
16 it was less expensive to the area in general, the
17 water users in general, to use the available surface
18 water that was already available in the area and to
19 reduce pumping to a level that would not mine the
20 aquifer; and in doing so, it gave the legislature
21 some information that they could use in a decision
22 as to whether or not public policy needed to be
23 created to handle this problem.
24 Q. You've responded by saying that in this
25 instance it was important to consider the costs and
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1 externalities. Would you not agree, you as a
2 resource economist, for public policy
3 decision-makers that that is generally a good thing
4 to consider?
5 MR. SAXE: Objection form.
6 Counsel, I think you've truncated a
7 fairly extensive and qualified answer
8 with a very oversimplified restatement
9 of the witness' testimony.
10 Q. (By Ms. Stinson) You can answer my
11 question.
12 A. I guess my opinion would be that it
13 depends. It depends primarily upon whether or not
14 there exists legislation or any policy from whatever
15 source that is paying attention to the problem.
16 In the Texas case, in the subsidence case
17 in Houston, there was no vehicle by which
18 individuals that are -- that were pumping water and
19 mining the aquifer could be -- there was no way the
20 problem could be addressed.
21 We had, in the Houston area, I think there
22 was something like 800 municipal urban water
23 districts, each of which had the right under Texas
24 law -- and Texas has the full capture law, unlike a
25 lot of other states.
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1 There was nothing to prevent these people
2 from drilling a well or you or me, to go into the
3 area and drill a well, pump as much water as we
4 wanted to, do with it as we wished.
5 Now, so that we had no -- there was no
6 jurisdiction here to direct individuals in their
7 operations and the problem was continuing. Some of
8 the areas have subsided as much as 9 feet since
9 1945.
10 So in that case, it was a total lack of any
11 kind of law or legislation in order to direct the
12 problem. Now, what do you do in that case? Well,
13 one of the things you can do is to take a look at
14 the alternatives, what are the costs of the
15 alternatives. If we allow it to continue and the
16 subsidence continues, then we're going to have this
17 stream of damages into the future.
18 We can compare that with the cost of the
19 alternative, which is to bring in the more expensive
20 surface water. It's more expensive because it has
21 to be treated extensively, and look at what is our
22 least cost alternative for supplying water to this
23 area. That's what we did, and it was then
24 subsequently used in creating a vehicle by which
25 ground water withdrawal could be managed. So I
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1 guess that's why I think it depends. It depends on
2 what exists in terms of law.
3 Q. Can you give me instances of when it would
4 not be wise for public policy-makers to consider the
5 externalities and costs of alternative ways of
6 proceeding?
7 A. Well, I guess I would say that it is always
8 at some point important to consider all of the
9 costs. I would assume that in passing a law,
10 legislature would do that.
11 Q. You give our legislature a lot of credit.
12 MR. SAXE: Objection to form.
13 MS. STINSON: Editorial comment.
14 Excuse me.
15 Q. (By Ms. Stinson) You mentioned your work
16 on the New Mexico/Texas dispute involving the Pecos
17 River. Did you testify regarding that information
18 at any point?
19 A. No. I was -- there was an out-of-court
20 settlement before I was asked to testify.
21 Q. Other than the instances you've talked to
22 me about regarding the work for TexCor and the work
23 on the soil subsidence, have you in any other
24 instances given testimony?
25 A. I think that's it.
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1 Q. We got in the middle of your discussion in
2 your involvement with the Hazen & Sawyer report.
3 You were telling me about issues that you had had
4 input on. We had gotten up to, I think, when
5 Hazen & Sawyer was developing a draft report and you
6 have described to me those issues on which you had
7 had input.
8 Can you tell me just generally next, or
9 throughout the development of that report, what your
10 input was, what involvement you had with
11 Hazen & Sawyer?
12 MR. SAXE: Objection to form.
13 Counsel, that's an extremely broad
14 question.
15 MS. STINSON: Well, let's take it
16 through the time frame.
17 Q. (By Ms. Stinson) Do you know when the
18 first draft report was issued?
19 A. I think it was toward the end of June.
20 Q. Were there preliminary drafts that you
21 reviewed and commented on?
22 A. Could you be more specific in terms of
23 preliminary drafts?
24 Q. There is actually a semi-official document,
25 as I understand, called the "draft final report."
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1 Were there any editions, either partial
2 pieces of the report or a more preliminary draft
3 than that, which you reviewed?
4 A. In terms of reports, I recall a draft
5 report -- it's called a final report -- and then a
6 completion report.
7 Q. Are those the only reports that you
8 actually reviewed? I mean, my question is pretty
9 simple. Did you get any pre-publication either
10 chapters or sections or, in fact, an entire report
11 from Hazen & Sawyer that you looked at?
12 A. Not that I recall.
13 Q. Did you review the draft final report after
14 it was issued in June and make comments on that?
15 A. Yes.
16 Q. And did you make written comments?
17 A. Yes.
18 Q. To whom were those given?
19 A. They were sent to Dr. Grace Johns.
20 Q. Did you have any interaction with
21 Grace Johns with regard to your comments?
22 A. If memory serves me correct, I think there
23 was one meeting after that draft report.
24 Q. And before the final report?
25 A. I think that's correct.
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1 Q. Other than meetings, did you have telephone
2 conversations with Grace Johns regarding that?
3 A. I think there were some, yes.
4 Q. What was the purpose or subject of the
5 meeting that you had between the time of the draft
6 final and the final report?
7 A. The best I recall, it was just to go over
8 the draft to look at the methodology, the
9 assumptions and so forth; but mainly to get an
10 explanation and information from her.
11 Q. Did you -- strike that.
12 Did you notice any information or
13 explanation in the final report based upon what you
14 had commented on or you had had input on?
15 MR. SAXE: Objection to form. I don't
16 understand the question.
17 If you understand, you may answer
18 it.
19 A. Well, I think I understand. I think you're
20 asking me if anything that I told her in our meeting
21 subsequent to the draft report showed up in the
22 final report?
23 Q. (By Ms. Stinson) Right.
24 A. Nothing specific, except for one thing.
25 There was question in my mind as to how they had
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1 handled property tax estimates through the -- using
2 the FLIPSIM model that they used. And I asked to
3 check that, and I think there was a change made
4 subsequent to that.
5 MR. SAXE: Excuse me. Could you read
6 that back.
7 (WHEREUPON, the requested
8 portion of the record was read
9 by the court reporter.)
10 Q. (By Ms. Stinson) Who was at this meeting
11 you mentioned?
12 A. It would have been Dr. Lacewell, I believe,
13 and Mr. Saxe and me.
14 Q. And the Hazen & Sawyer people?
15 A. Yeah. I think Chris Moline and Grace.
16 Q. Subsequent to the issuance of the final
17 report, did you have any input or interaction with
18 Hazen & Sawyer between that time and the time of the
19 so-called contract completion report?
20 A. I attended the funding -- well, let's see.
21 There were two things. There was a
22 workshop. I don't remember the exact date on one
23 day; and the next day, she gave her report to the
24 funding council in West Palm Beach. I attended that
25 meeting.
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1 Q. The workshop and the funding council
2 meeting?
3 A. Yes.
4 Q. Do you recall what month that was?
5 A. It must have been July or August. Perhaps
6 it was August.
7 Q. What was the topic of discussion at the
8 funding council, at that meeting?
9 A. She was presenting the results of her
10 analysis.
11 Q. The workshop was before the meeting?
12 A. Yes.
13 Q. And what was the purpose of the workshop?
14 A. I don't know what the stated purpose was,
15 except to present the results of the report.
16 Q. Were you invited to the workshop?
17 A. Yes.
18 Q. By Hazen & Sawyer?
19 A. I'm not sure how the invitation came about.
20 I was asked by the Justice Department's Counsel to
21 attend.
22 Q. Who all was at that meeting, the workshop?
23 A. I'm having trouble distinguishing between
24 the workshop and the funding council because there
25 was a large group in both. There was a staff of the
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1 South Florida Water -- some of the staff of the
2 South Florida Water Management District was there.
3 There was some representatives, I think, from the
4 sugar industry and from the vegetable industry,
5 unless I'm confusing it with the funding council.
6 I'll have to tell you. I'm not real clear
7 as to who was at each one.
8 Q. All right. Was there any other interaction
9 with Hazen & Sawyer prior to issuance of the
10 so-called completion report?
11 A. No.
12 Q. And subsequent to the project completion
13 report --
14 MS. SAXE: Object to form.
15 Counsel, I don't think there is a
16 project completion report.
17 MR. BURGESS: Contract.
18 MR. SAXE: Contract completion
19 report, is that what you're referring
20 to?
21 Q. (By Ms. Stinson) Excuse me. Contract
22 completion report. Did you understand me to mean
23 the contract completion report?
24 A. Yes, yes.
25 Q. Subsequent to the contract completion
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1 report, what interaction or involvement have you had
2 with Hazen & Sawyer?
3 A. There have been some phone conversations
4 and there was two meetings.
5 Q. When were the phone calls? Have there been
6 a series of them over the months?
7 A. There have been probably -- yeah, three or
8 four, maybe a half a dozen over the time frame since
9 that contract completion report was submitted to the
10 board.
11 Q. What two meetings?
12 A. Well, there's been more than two meetings.
13 MR. SAXE: Excuse me. Was your
14 question, meetings before the contract
15 completion report and after the final
16 report or just --
17 Q. (By Ms. Stinson) My question now relates
18 to the time period subsequent to submission of the
19 contract completion report. That's as you
20 understood it; is that correct, Dr. Jones?
21 A. I think so.
22 Q. The meetings.
23 A. We met with Dr. Johns at her offices in --
24 I think it was in early January.
25 Q. Who's "we"?
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1 A. Dr. Lacewell and Dr. Bill Boggess and me.
2 Q. What was the purpose of that meeting?
3 A. The purpose of the meeting was to discuss
4 the criticisms that had been raised specifically by
5 Dr. Polopolus and Dr. Richardson concerning her
6 study.
7 Q. Who called the meeting?
8 A. Well, let me just tell you my best
9 recollection of the scenario.
10 Q. Okay.
11 A. There had been an attempt by the board, or
12 a request by the board, to have a meeting of all of
13 the economists involved in this economic impact
14 evaluation of the SWIM plan. And there had been a
15 meeting scheduled, and then it was canceled.
16 Q. When was it scheduled for?
17 A. I think the first one was very early
18 January.
19 Q. Okay.
20 A. And that meeting was canceled. And then
21 the decision was made that we would meet with -- I
22 guess, then I was asked to meet with Hazen & Sawyer,
23 individually, just us, not with any other
24 participants from any other -- from the sugar
25 industry.
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1 Q. Were there participants from the Water
2 Management District?
3 A. Not in this first meeting.
4 Q. Do you know why the meeting of all the
5 economists was canceled?
6 A. I don't really have any specific
7 knowledge. It's my understanding that Dr. Polopolus
8 was unavailable and presumably Dr. Richardson, too.
9 Q. So you met in January then with the
10 Hazen & Sawyer folks privately, individually?
11 A. (Witness nods head.)
12 Q. And the purpose was to discuss the
13 criticisms by Polopolus and Richardson?
14 A. Yes.
15 Q. Did you provide to Hazen & Sawyer any
16 written documents at that time or comments?
17 A. No.
18 Q. What other meetings have you had with
19 Hazen & Sawyer?
20 A. There was one other -- there was another
21 meeting that we had following a meeting that she had
22 with Polopolus and Richardson, and we wanted to meet
23 with her to just find out if -- what differences or
24 similarities of methodology and so forth they had
25 discussed.
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1 Q. So you had a meeting with her prior to her
2 meeting with Polopolus and Richardson; is that
3 correct?
4 A. Right.
5 Q. And then did you meet with her and
6 Polopolus and Richardson, all of you together?
7 A. No. No, we didn't.
8 Q. But then you met with her again after she
9 met with Polopolus and Richardson?
10 A. That's correct.
11 Q. And what was the subject or topic of that
12 meeting?
13 A. Well, as I said, we wanted to find out what
14 had been -- what they had discussed in terms of any
15 differences in the methodology model, assumptions
16 and so forth, that might have led to, you know, the
17 big differences in estimates that they got or had
18 been reported.
19 Q. And can you tell me the substance of that
20 discussion that you had with Hazen & Sawyer? You
21 told me the general scope of the discussion, but can
22 you tell me the substance of what you learned about
23 their meeting with Polopolus and Richardson?
24 A. Yes. They had, as I understand it, a
25 detailed discussion of the differences between their
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1 approaches.
2 Q. Were those differences resolved?
3 A. It's my understanding that they -- that not
4 all of them were.
5 Q. Did Grace Johns indicate that as a result
6 of her meeting with Polopolus and Richardson, she
7 would change anything in her approach or
8 methodology?
9 A. You mean in her studies she had already
10 finished, or -- I don't think she had an opportunity
11 or was contracted to go back and change the study
12 that she had completed.
13 Q. How about, would she have changed? Did she
14 indicate to you that some of the criticism would
15 have caused her to change her report if she had the
16 opportunity?
17 A. I don't recall her saying that, no.
18 Q. You are aware, are you not, that -- well,
19 let me not get to that yet.
20 What other meetings have you had with
21 Hazen & Sawyer?
22 A. I attended the economists' meeting that was
23 sponsored by the board, and I think that was on
24 February the 10th. I attended part of it.
25 Q. Anything else?
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1 A. I think that's it. I think I have spoken
2 to them since then.
3 Q. That was my question. Have you had any
4 conversations with Hazen & Sawyer since then?
5 A. (Witness shakes head.)
6 Q. Are you planning to meet with Grace Johns
7 next Monday?
8 A. Yes.
9 Q. You are aware currently, are you not, that
10 Hazen & Sawyer is working on a 20-year projection of
11 the economic effects?
12 A. (Witness nods head.)
13 Q. You have to answer out audibly.
14 A. Oh, I'm sorry. Yes. Yes, I am.
15 Q. When did you learn that that study was
16 being undertaken by Hazen & Sawyer?
17 A. That was, I guess -- I don't recall
18 exactly.
19 Q. Do you recall whether you learned of that
20 20-year study in one of your meeting with
21 Hazen & Sawyer or through some other means?
22 A. No. It was through some other means. I
23 think it was the general grapevine, sometime prior
24 to the economists' meeting we had on February the
25 10th.
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1 Q. Let me go through some documents here. Let
2 me show you what's already been marked as part of
3 Lacewell Deposition Exhibit 1 and ask you whether
4 you had any input into that document.
5 A. I don't recognize this document. I don't
6 think I had any part in it.
7 Q. Okay. That's easy. This one, though, has
8 your name on it.
9 A. That could mean something.
10 Q. Exhibit 2, can you tell me how that
11 document was developed and what it is?
12 A. I don't know what the correct answer is
13 here. I haven't seen this document for a long time,
14 and I don't have a great deal of specific
15 recollection of it; but I think it is a collection
16 of thoughts by Dr. Lacewell, Dr. Ozuna, and myself
17 as suggestions of factors, variables and so forth
18 that Grace Johns might consider in her study.
19 My part of this would probably go into the
20 secondary impact estimates.
21 Q. Let me show you what was marked as
22 Deposition Exhibit 6 and ask you to identify that
23 and the circumstances under which it was prepared.
24 A. This is a document that Mr. Saxe asked me
25 to prepare.
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1 Q. For what purpose did you prepare that? Do
2 you know?
3 A. As I recall, this was soon following the
4 presentation by Dr. Polopolus -- well, actually both
5 Grace Johns and Leo Polopolus at the funding council
6 meeting -- and he had asked me to take a look at the
7 two estimates and do some comparison to see if we
8 could reconcile the two or determine what the
9 differences were.
10 Q. Let me take a look at that.
11 A. (Witness complies.)
12 Q. Did you discuss these comments with
13 Dr. Polopolus? Did you talk to him about where he
14 got the information?
15 A. No.
16 Q. With regard to the question of whether one
17 should look at FTE's or individuals, do you have any
18 information which would indicate one way or another
19 whether there are more individuals working than
20 there are FTE's, i.e., whether there are a lot of
21 part-time jobs?
22 A. I have looked at the -- some of the data on
23 that, and it does appear that there are a number of
24 part-time workers in the EAA.
25 Q. What data would -- have you looked at on
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1 that?
2 A. Some of the Florida agricultural statistics
3 that show employees -- the employee pattern within
4 the EAA.
5 Q. Are those statistics maintained by the
6 Department of Agriculture or for the Department of
7 Agriculture? Who do you know specifically -- if you
8 can tell me specifically what document you looked
9 at.
10 A. It was a part of the periodical report of,
11 I believe, it's the Florida Department of Employment
12 and Employment Security if -- I think that's the
13 name of the agency.
14 Q. Department of Labor and Employment
15 Security, does that sound right?
16 A. That could be it.
17 Q. Have you at any time discussed with
18 Dr. Polopolus the comments that you make in
19 Exhibit 6?
20 A. No.
21 Q. Have you discussed with Grace Johns the
22 substance of the comments that you make in
23 Exhibit 6?
24 A. Those specific comments, not to my
25 recollection.
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1 Q. Let me show you Exhibit 7. I have here a
2 copy of Dr. Luke's report if that will help.
3 A. This, again, is comments on a document that
4 is questioned by Justice Counsel to compare --
5 Q. Let me refer you specifically to No. 4 on
6 Page 2, "Jurisdiction - Specific Impacts." It says,
7 "This comment is rooted in the modeling psyche of
8 Liestritz." What does that mean?
9 A. Could I refer to the comment?
10 Q. Sure. Sure. This is not a memory test.
11 A. Wait a minute. I've got to get on the
12 right -- okay.
13 The comment by Dr. Luke to which my comment
14 refers -- I'm sorry. This is actually -- this
15 document, I believe, is prepared by Dr. Luke and
16 Dr. Leistritz.
17 But relating to "Jurisdiction - Specific
18 Impacts," the statement that "This comment is rooted
19 in the modeling psyche of Leistritz," simply
20 suggests that this is the kind of work that
21 Dr. Leistritz has done a great deal of over the
22 years, and, that is, estimating jurisdiction
23 specific impacts in a modeling format.
24 Q. Do you have any opinion as to whether or
25 not that would be helpful information in an economic
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1 impact assessment?
2 A. Well, that's very difficult to answer. It
3 may be depending upon the purpose for which you're
4 doing the study. For one purpose, it may be useful;
5 for another purpose, it may not be particularly
6 useful.
7 Q. Well, what do you understand the purpose of
8 the Hazen & Sawyer study to be?
9 A. The purpose of the Hazen & Study, as is
10 reported in the request of the RFP, or the Request
11 For Proposal, stated is doing an economic impact
12 analysis.
13 I think it specifically talks about the
14 impacts on employment and personal income within the
15 impact area.
16 Q. For that purpose, do you believe it would
17 be important to look at the jurisdiction specific
18 impacts?
19 A. Well, this comment by Dr. Luke and
20 Leistritz specifically mentions, for example,
21 individual towns and school districts and a number
22 of impacts that, in my opinion, appear to go well
23 beyond what was asked for by the South Florida
24 Management District in its request for proposal that
25 was eventually awarded to Hazen & Sawyer.
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1 Q. Well, let me back up then. With regard to
2 the public policy issues that the water management
3 district must deal with, do you think it would be
4 helpful or important to look at jurisdiction,
5 jurisdictional specific impacts?
6 A. Well, I'm really not prepared to comment on
7 the issues that the board looks at beyond what
8 they're doing in the economic impact analysis in the
9 SWIM plan; and in which case, I would go to what
10 they requested.
11 Q. You have no opinion as to what the board
12 should look at in terms of evaluating the economic
13 effects of the SWIM plan?
14 A. None. Other than what's called for by their
15 own rules and regulations.
16 Q. What rules and regulations are you
17 referring to?
18 A. Well, as I understand it, the SWIM plan,
19 and against the board who's implementing the SWIM
20 plan, has no direct obligation to do an economic
21 impact analysis.
22 It is an economic impact analysis that the
23 board asked for. And as Hazen started to do the
24 economic impact analysis, the board prepared the
25 request for proposals; and I haven't looked at
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1 beyond what they requested to be done as to try to
2 draw any kind of conclusion as to what they should
3 be doing.
4 Q. The last sentence of Point 4 on Exhibit 7
5 states, "This could be interpreted as a criticism of
6 the board from myopia, but not of Hazen & Sawyer."
7 Would you agree or disagree or have an
8 opinion regarding whether that's a valid criticism
9 of the board for myopia?
10 A. I'm not making that criticism.
11 Q. Do you have any opinion whether that
12 criticism is valid or not?
13 A. No, not really.
14 MR. SAXE: Counsel, I'm ready for a
15 five-minute break, five-minute
16 bathroom break.
17 (WHEREUPON, a recess was taken.)
18 Q. (By Ms. Stinson) Still on Point 4 here of
19 Exhibit 7. Would you agree that if there are
20 significant economic effects in terms of secondary
21 effects on unemployment and other induced effects,
22 that they would occur primarily within the EAA
23 area, specifically in the small towns surrounding
24 that -- such as, Belle Glade as opposed to Palm
25 Beach County as a whole?
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1 A. Well, that's a very broad question. We're
2 talking about a wide variety of impacts, a wide
3 variety of towns; and I just don't have the --
4 haven't done the analysis really to be able to
5 answer that question.
6 Q. You don't feel you can say just generally
7 without specifics --
8 A. Oh, no.
9 Q. -- what the primary effects would be in
10 those towns?
11 A. No.
12 MR. SAXE: Objection.
13 Counsel, was your question about
14 primary effects, or did you say
15 indirect and induced and unemployment
16 effects?
17 MS. STINSON: I meant primary --
18 MR. SAXE: If you'll just clarify
19 your question, and the witness, I'm
20 sure, will answer it.
21 Q. (By Ms. Stinson) In a more generic sense,
22 the most substantial effect would be felt in the
23 small towns around the EAA?
24 A. I don't think you can conclude that in
25 general. We've been involved in studies that show
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1 that people may commute long distances, operators
2 may purchase inputs from outside the region; and, in
3 particular, in this case, we have the Palm Beach --
4 West Palm Beach City in near proximity to some very
5 small towns. I would think the likelihood of a very
6 significant amount of the money that's paid for
7 jobs, direct payments from the Ag industry and the
8 EAA, would be spent in West Palm Beach.
9 Q. Are you telling me that you don't have any
10 information that would answer that question one way
11 or the other?
12 A. At this point in time, that's correct.
13 Q. Are you in the process of gathering any
14 information that would answer that question?
15 A. No, I'm not.
16 Q. Let me ask you to turn to Page 3 and look
17 at Point 8.
18 A. (Witness complies.)
19 Q. Well let me back up to 4. This is one that
20 was punted to you by Dr. Lacewell. The comment in
21 parenthesis, "See list of citations. I notice they
22 left out those done in Texas. Oh, well."
23 What are you referring to?
24 A. I've worked with Dr. Luke and Leistritz in
25 the past on some studies in Texas, as well as
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1 elsewhere. I just happen to -- when I went through
2 the references, I just had a special eye appeal for
3 any of those that we did in Texas. It has no
4 particular meaning one way or the other.
5 Q. Okay. No. 8, the statement, "I have done
6 enough analysis of the Palm Beach general economy to
7 know that it is robust and adding significant jobs
8 each year through normal growth."
9 What analysis have you done of the Palm
10 Beach County economy?
11 A. I acquired and analyzed the data on
12 employment and personal income, as well as some
13 other factors that's reported annually by the Bureau
14 of Economic Analysis, U.S. Department of Commerce.
15 Q. For what period of time did you look at
16 that information?
17 A. I would have to look at that. I don't
18 recall exactly. I think I went back 10 years.
19 Q. Up till what date? Do you recall?
20 A. The most recent that I had for Palm Beach
21 County -- I think it was 1991. I could be wrong.
22 It could have been 1990, but it was the most recent
23 report issued by the BEA.
24 Q. Did you look at any jurisdiction specific
25 information?
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1 A. I looked at -- yes, at Palm Beach County
2 and Hendry County.
3 Q. But it gets no more specific than
4 county-wide?
5 A. That's right. The BEA data is -- the basic
6 building block is the county.
7 Q. Does that data show what types of jobs are
8 added each year through normal growth?
9 A. I would have to refer back to the document
10 to recall exactly what is on the BEA. I believe it
11 does show jobs by what's called major divisions of
12 the standard industrial classification code, and it
13 may, also, show -- no.
14 I started to say something, and I don't
15 think I'm right. I believe these do show job growth
16 by major division, but I don't recall exactly. I
17 know it does show total employment and so forth.
18 Q. Other than looking at that information,
19 have you had any other analysis or additional
20 analysis of the Palm Beach general economy?
21 A. That was my primary source. It's one
22 that's widely used and accepted in looking at area
23 economic growth, and so I looked to it first. I did
24 contact the Florida Department of Statistics Panel,
25 the census data for the State, and got information
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1 on Palm Beach County and Hendry County. And that, I
2 think is it.
3 Q. Point 9, the comment, "They are trying to
4 link SWIM costs to Everglade benefit savings or
5 enhancement as if this were a BC analysis. It is
6 not. They may or may not know the significance or
7 the difference." Explain that to me.
8 A. I'll need to consult this again. Okay.
9 I believe they are talking about the
10 Economic Benefits Report, Dr. Luke and Leistritz
11 were. And in that comment, they talk about
12 comparing the economic benefits from avoidance of
13 wetland losses to the economic impact costs of the
14 SWIM plan.
15 I took that statement to mean that they
16 were suggesting some comparison of the benefits and
17 costs of the SWIM plan, as we would do in a benefit
18 cost analysis. That benefit cost analysis, to the
19 best of my knowledge, was not asked for by the South
20 Florida Water Management District.
21 Q. Do you believe it would be, from a public
22 policy standpoint, wise for the board to look at a
23 benefit cost analysis?
24 A. It's my understanding that the public
25 policy is already in place.
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1 Q. What's that understanding based on?
2 A. What I have read in the Marjory Stoneman
3 Douglas Act and the settlement agreement between the
4 U.S. and South Florida Water Management District.
5 Q. Do you consider yourself an expert at
6 analyzing the non-market benefits or the -- I guess
7 market benefits of the wetlands' loss scenarios?
8 A. I have done some studies on the valuation
9 of non-market goods.
10 Q. What studies have you done?
11 A. I did a study of the -- valuing the bay and
12 estuaries on the Texas Gulf Coast, specifically a
13 study of the Matagorda Bay, which was a non-market
14 valuation study.
15 Q. How did you perform that study?
16 A. We used what we called a "travel cost"
17 model.
18 Q. Did you do surveys? Were surveys a part of
19 that study?
20 A. Yes.
21 Q. When was that?
22 A. The survey was done in 1986. We finished --
23 we completed the valuation portion of that study for
24 the selected bay and estuaries in -- it was either
25 late '89 or early 1990.
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1 Q. With regard to the Everglades issues, have
2 you analyzed or do you intend to analyze in any way
3 the benefits report or the benefits analysis?
4 A. I've not been asked to do that, no.
5 Q. The study you did on the bays and
6 estuaries, has that been published?
7 A. Yes, it is in a Ph.D. dissertation by
8 Dr. Teofilo Ozuna There are some subsequent journal
9 articles that have come from his dissertation.
10 Q. What was your involvement in his
11 dissertation?
12 A. I was his major advisor, and I was project
13 leader on the project for collecting the --
14 conducting the survey and collecting the data.
15 Q. We'll put that back into the pile
16 (indicating documents).
17 A. Both of them?
18 Q. Well, that one, too.
19 A. This one, in particular?
20 Q. Let me show you Exhibit 8 and ask you to
21 identify that.
22 A. Okay. This is mine. It's a document that
23 I was asked by Mr. Saxe to prepare. There is --
24 something happened on the last page. I don't know.
25 Maybe this was just faxed at a reduced -- because I
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1 didn't recognize it at first because it's a
2 different type style or size anyway and so --
3 Q. But it is, in fact, part of the document?
4 A. To the best of my recollection. Without
5 looking at the original document, I will -- I think
6 that's the appropriate last page.
7 MR. SAXE: What exhibit number is
8 this? 8?
9 MS. STINSON: Yes.
10 Q. (By Ms. Stinson) What does that document
11 address?
12 A. It basically addresses the U.S. sugar
13 program and the development of sugar acreage in
14 production in Florida and some of the current
15 characteristics of the sugar industry.
16 Q. What research did you do in developing that
17 document?
18 A. It was primarily a review of literature.
19 Q. Do you recall what literature?
20 A. I relied on the U.S. Sugar & Sweetner
21 Report. There are issues and some other documents
22 that I mentioned earlier that relate to the program,
23 operation of the U.S. sugar support program quota
24 system and price supports.
25 Q. Did you discuss this document, or have it
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1 reviewed at all by Dr. Gardner?
2 A. I think he has seen it.
3 Q. Has he made any comments to you on it?
4 A. To the best of my recollection, the only
5 comment is a verbal one, in which he said he had
6 read it and he didn't have any major disagreements.
7 Q. Did he have any minor disagreements?
8 A. He didn't mention them if he did.
9 Q. Prior to doing work on this -- prior to
10 working on the Everglades Restoration Project, did
11 you have any experience or background in involvement
12 with the sugar industry or sugar policy?
13 A. No. No specific involvement.
14 Q. You said that a little bit with a qualifier
15 What involvement, generally?
16 A. Well, I guess when you're an agricultural
17 economist, then you're aware of the various policies
18 and so forth that affect all U.S. commodities; and
19 so I did have some general knowledge of the Florida
20 sugar industry and the whole U.S. sugar industry.
21 Q. And prior to doing your work on that on
22 Exhibit 8, had you done any research or study of the
23 sugar policy?
24 A. No, I have not.
25 MR. SAXE: Counsel, if I could take
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1 a look at it when you're done. I see
2 there is some red -- it looks like
3 scratched-out annotation on the
4 boarder of the first page and some
5 other marks in the margin of the
6 document and in some of the text.
7 MS. STINSON: The red is mine.
8 MR. SAXE: Is that the case on
9 any of these other exhibits? Because
10 if so, I think we need to go on record
11 as saying, not all the annotations on
12 the documents as entered into the
13 record were on the documents as
14 produced.
15 MS. STINSON: I mean, anything in
16 red on any of these documents is mine.
17 If it's not in red, it was on there
18 originally, I think.
19 We can redact that for
20 copying purposes. I don't have any
21 problems with that.
22 MR. SAXE: I don't know that it's
23 really going to be necessary to do
24 that. Although, I don't know that the
25 color distinction is going to show up
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1 on any photocopies. I'm just entering
2 on the record that there are additions
3 made to the document by Counsel after
4 they were produced that don't belong
5 to the creator of the document.
6 MS. STINSON: Okay.
7 MR. SAXE: Although they are nice
8 embellishments, I have to admit.
9 Q. (By Ms. Stinson) Dr. Jones, you indicate in
10 this document that the Florida Sugar industry has
11 expanded in the face of a declining national market.
12 The national market continues to exceed the national
13 production, does it not?
14 MR. SAXE: Objection to form.
15 Is that a quotation from the document?
16 MS. STINSON: No. That's a question.
17 Q. (By Ms. Stinson) Does the national
18 consumer demand exceed the U.S. production?
19 A. Yes.
20 Q. So although demand has declined, it still
21 exceeds domestic production; is that correct?
22 A. Well, what has happened over the last
23 several years, is that the capital consumption of
24 sugar has fallen fairly steady at some period of
25 time. It's leveled out. And I think may have
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1 increased within the last year or two, but over this
2 period the trend's been downward. The total
3 production has, also, fallen; and at the same time,
4 production has been increasing throughout this same
5 period, primarily in Florida. So that's the basis
6 of that statement.
7 Q. But, nonetheless, the demand still exceeds
8 the production in the United States for sugar?
9 A. At this point in time, yes, it does.
10 Q. Would you agree that the so-called world
11 sugar price is affected by market control of other
12 countries?
13 A. I would say that the world sugar price is
14 affected by market control of other countries and
15 market control within the United States. It's
16 affected by market control in all countries, not
17 just other countries.
18 Q. The comment is make on Page 5 that, "The
19 very existence of the Florida sugar industry is
20 dependent upon price supports and subsidies."
21 Is that your opinion?
22 MR. SAXE: May I see the document,
23 please.
24 MS. STINSON: (Complies with
25 document.) It's the very first line.
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1 MR. SAXE: Oh, thank you.
2 A. Yes, that's my statement.
3 Q. (By Ms. Stinson) Is that your opinion?
4 A. Yes, it is. I think the Florida sugar
5 industry is very dependent upon price supports and
6 subsidies.
7 Q. Is that true of other agricultural crops as
8 well in the United States.
9 A. Not to the extent that it is in the case of
10 sugar.
11 Q. In that statement, are you're referring to
12 any subsidies other than agricultural subsidies?
13 A. I'm referring to subsidies to the sugar
14 industry and specifically to the sugar program which
15 imposes quotas on imports from other countries and
16 by doing so, supports the price of sugar to U.S.
17 consumers at levels above the world price and,
18 consequently, constitutes the subsidy to the sugar
19 industry.
20 Q. But you're not referring to any other types
21 of indirect subsidies?
22 A. There are a number of other subsidies that
23 exist; but in this particular statement, I'm
24 referring just to price supports and subsidies.
25 Q. Okay. Now, you indicate that, in your
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1 opinion, there are no other crops in the
2 United States that are as dependent on the
3 subsidies. Am I rephrasing you correctly?
4 A. Are you reading from your document?
5 Q. No. I'm trying to repeat what you told me
6 a minute ago.
7 A. Yes, that's a fair characterization of what
8 I said.
9 Q. On Page 5, you have a chart which
10 has "deficiency payments," and other things. And for
11 other crops -- and I notice a deficiency payment of
12 a little over $200 an acre for rice. Would that not
13 constitute a subsidy, a crop that's equally
14 dependent on subsidies as sugar?
15 A. Equally dependent?
16 Q. Or more dependent?
17 A. Not according to my analysis.
18 Q. Can you explain that to me?
19 A. In the programs like the one for rice, and
20 for most other crops, the amount of subsidy is
21 rather apparent. It is the payment, the deficiency
22 payment that comes in a check to producers form the
23 U.S. Treasury.
24 In the case of sugar, the subsidy is not
25 quite so apparent because it comes to the sugar
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1 growers from -- through the market because of the
2 higher price. And the $200 per acre is not as high
3 as the subsidy that sugar growers receive through
4 that price support by my estimate or by the estimate
5 of a number of other professional economists.
6 Q. You're not looking at it on a per acre
7 basis then; is that correct?
8 A. Yes, I am.
9 Q. You're saying that on a per acre basis
10 sugar receives more than $200 worth of benefits from
11 subsidies?
12 A. Yes, I am.
13 Q. What is the figure of subsidies per acre
14 received by sugar?
15 A. Well, for the Florida sugar industry, I
16 have estimated the total subsidy -- now, this would
17 include some things other than the price support.
18 Q. What things?
19 A. Like the Central and South Florida Flood
20 Control Project, the South Florida Water Management
21 District assessment-- differential assessment fees,
22 the local government taxes based on productivity
23 rather than market value.
24 When you take all of those into account, my
25 estimate is that those subsidies translate into a
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1 per acre estimate of what I have estimated in this
2 document that I sent to Mr. Saxe of $878 per acre.
3 Q. Well, let's take a -- you didn't consider
4 other subsidies to these other crops?
5 A. That's true. I didn't. That's right.
6 Q. If you look at the subsidy per acre, not
7 counting the price support subsidy --
8 A. Just from the price support program? Is
9 that what you'd like for me to do?
10 Q. Right. Tell me that.
11 A. My estimate is that -- this comes to about
12 $258 million per year, and if we use the acreage
13 of -- let's say, use the Sugar & Sweetner Report
14 acreage of 428,000 acres.
15 Q. You're talking just about Florida then?
16 A. Yes.
17 Q. The subsidy that's going to Florida and the
18 benefit in Florida?
19 A. Right. So that's 258 million divided by
20 428,000. That comes to --
21 Q. Have you got a calculator?
22 A. -- some amount.
23 MR. SAXE: Off the record.
24 (WHEREUPON, there was discussion
25 off the record.)
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1 A. That's right at $600 an acre. It's $602 an
2 acre, to be specific.
3 Q. (By Ms. Stinson) Does that figure represent
4 the difference between the world price and the U.S.
5 price for sugar?
6 A. Not the current world price.
7 Q. What world price?
8 A. This is the difference between the U.S.
9 supported price and the world price that's estimated
10 or projected by several different economists that
11 would exist if the industrialized nations, primarily
12 the European economic community and the U.S., as
13 well as some others, liberalized their trade and
14 went to a free trade policy.
15 That price comes, as I say, comes in around
16 14 to 16 cents per pound. If you look at that
17 compared to the recent prices of U.S. supported
18 prices, 21 to 23 cents per pound, I think what I
19 finally used in making this estimate was a
20 difference of 7 cents per pound.
21 Now, that difference is not as great as the
22 difference between the U.S. support price and the
23 actual world price in recent years. That difference
24 has been much greater. But I believe in an earlier
25 question you asked me about that, and I think that
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1 lower price is affected by the U.S. sugar policy
2 which imposes quotas and does not allow countries
3 such as the Caribbean countries, Mexico and others,
4 to import more than just a certain amount of sugar
5 to the U.S. So the price in those countries are
6 depressed by the U.S. sugar program.
7 So what we'd expect to happen, if these
8 countries liberalize their trade, is that the world
9 price would rise. And so that's the difference that
10 I used was a 7 cents' difference between the support
11 price and what is projected to be the world price in
12 the case of free trade.
13 Q. And your conclusions regarding that world
14 price are in a document, a memo that you sent to
15 Grace Johns?
16 A. Yes.
17 Q. As you told me earlier?
18 A. Uh-huh.
19 Q. Was this document presented to anyone
20 either verbally, through a report, or in writing to
21 anyone other than Counsel?
22 A. Not that I recall.
23 MR. SAXE: What was the question?
24 Presented other than verbally or in a
25 report? I'm sorry. I didn't hear
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1 you.
2 Q. (By Ms. Stinson) Was it presented either
3 in writing or verbally to anyone other than Counsel?
4 MR. SAXE: Thank you.
5 A. Not that I recall. Not by me. Let me
6 clarify this. I gave this document to Counsel. He
7 subsequently, I believe, shared it with a gentleman
8 in Florida; and we had some conversations concerning
9 it.
10 Q. (By Ms. Stinson) Who did you have
11 conversations with concerning that?
12 A. Well, again, I can't recall his name.
13 Q. What is he?
14 A. He lives in Tallahassee. He's a citizen in
15 Tallahassee. He chaired the session that I recently
16 attended at the Everglades Coalition Parks. What's
17 his name? Mr. Parks.
18 Q. Paul Parks?
19 A. I believe that's right.
20 Q. Other than that, Counsel asked you to
21 prepare this. Do you know the purpose for which
22 this document was intended or why you prepared it?
23 A. No. Let me also add something. I just --
24 my memory just came back a little bit. I believe
25 this document was also sent to Dr. Bruce Gardner by
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1 Counsel.
2 Q. The summary section begins by saying, "The
3 Florida sugar industry is an industry surviving only
4 on subsidies received from consumers and taxpayers.
5 It is not a sound industry on its own merits.
6 Several studies, including the economic impact
7 analysis of the SWIM plan by Hazen & Sawyer,
8 suggests that this industry" --
9 MR. SAXE: Excuse me, Counsel. If
10 you're going to read extensively into
11 the record form the document, I need a
12 copy to follow along with as you're
13 reading.
14 MS. STINSON: Well, it's the only
15 copy I have. I'll give it to you, and
16 you can check me out.
17 MR. SAXE: Well, I can't check
18 you against the record unless the
19 court reporter reads it back.
20 Do you want me to look over
21 your shoulder?
22 MS. STINSON: Sure.
23 Q. (By Ms. Stinson) -- (continuing) "suggests
24 that this industry could not produce and market it's
25 product in an open competitive market and earn a
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1 positive rate of return on the resources employed."
2 Is your opinion that without the sugar
3 program, that the Florida sugar industry would
4 disappear?
5 MR. SAXE: Objection to form.
6 Counsel, what do you mean that
7 the "industry would disappear"? You
8 obviously have some meaning other than
9 "disappear." What is it that you're
10 trying to ask the witness?
11 Q. (By Ms. Stinson) Do you understand what I
12 mean, Dr. Jones?
13 A. Not exactly.
14 Q. Is your opinion that the sugar would no
15 longer be produced in Florida absent the sugar
16 policy?
17 A. That is the conclusion of Hazen & Sawyer in
18 their initial tenure analysis, that they ran a
19 scenario in which the price was dropped, I believe,
20 to -- I don't recall exactly what it was. I think
21 it may have been 16 cents per pound. They ran their
22 analysis, and they said that -- I didn't see the
23 results of that analysis. I don't think it's
24 included in the contract completion report. But as
25 I recall, Grace Johns' comment was, "Everybody went
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1 out of business."
2 That has also been the conclusion of
3 another document that I recall reading that that may
4 happen. I want to say that I personally cannot say
5 that I have a final firm opinion on that.
6 My suspicion is that there would still be
7 sugar grown in Florida and in the EAA in the free
8 market condition. After having prepared this
9 document and after having seen some of the other
10 documents, I have reason to believe that that would
11 be true.
12 Q. You referred a minute ago to some other
13 document that indicated that sugar would no longer
14 be produced in Florida absent the sugar subsidy.
15 What document were you referring to?
16 A. I can't remember the title of it at this
17 moment. One of the authors on it was
18 Dr. Gordon Rausser. He's an economist, I believe,
19 at California Berkley. And to the best of my
20 recollection, that is a conclusion of the authors of
21 that document.
22 Q. You also just mentioned that subsequent to
23 writing this paper, Exhibit 8, you have obtained
24 additional information, and you're not sure that
25 that conclusion is correct. What additional
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1 information have you obtained?
2 MR. SAXE: Objection to form in
3 recharacterizing, "the witness is not
4 sure that that conclusion is correct."
5 I'm not sure that that properly
6 restates the witness' testimony, but
7 you can answer the question.
8 Q. (By Ms. Stinson) Well, before you do, let
9 me ask you if you need to -- if I did not correctly
10 rephrase your testimony, please correct me.
11 A. No. I think you're pretty close on that.
12 Q. All right.
13 A. But basically from the Sugar & Sweetner
14 reports that show declining cost of production and
15 processing per pound of sugar in the EAA,
16 conversations with Dr. Ron Lord, who suggested that
17 the sugar industry was highly efficient; and if this
18 is true, it would mean that they would be able to
19 compete with the rest of the world in producing
20 sugar.
21 Q. Isn't it true that the subsidies for other
22 crops, as well, such as, cotton, wheat, rice, and
23 corn are intended to keep that agriculture in
24 business in the United States?
25 A. Well, the U.S. farm policy has a number of
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1 stated purposes Whether or not it says in there
2 that we intend to keep these crops in agriculture in
3 the United States, I can't say that for sure.
4 Q. Wouldn't you agree, though, that generally
5 that's the purpose of subsidies, of these subsidies
6 in agriculture?
7 A. Well, I think -- generally we look at two
8 main purposes of the U.S. farm policy. One is to
9 provide income support, or we can also call it
10 subsidy; and the other is one of stability.
11 So the original intent of the farm programs
12 were to provide income support to farms and farm
13 families who needed such support. I think more
14 recently that has been recognized and stated in a
15 number of policy statements, Congressional hearings,
16 and other places that the program may not be working
17 exactly the way it was intended to do in that
18 regard.
19 Q. A minute ago you indicated that you thought
20 Grace Johns had run a scenario at the 16 cents or
21 14 cents per pound price. Do you have a copy of
22 what she did?
23 A. Not with me.
24 Q. Did she provide it to you?
25 A. The contract completion report, I did get
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1 from her, yes.
2 Q. But does that have the actual analysis?
3 A. I got it from the board. I don't believe --
4 it's the best of my recollection, she does not
5 present the analysis scenario of the 16 cents.
6 There is a section in the report on that scenario,
7 but I think --
8 MR. SAXE: Please finish your answer.
9 A. Well, there is a section in the report, in
10 which she discusses the assumptions and the method
11 and so forth that she used in that scenario; but to
12 the best of my recollection, she does not present
13 any tables or data or estimates.
14 Q. (By Ms. Stinson) And she has not provided
15 to you any of that outside -- you have nothing other
16 than what's in the report by her?
17 A. Absolutely nothing.
18 MS. STINSON: Why don't we go ahead
19 and break for lunch now.
20 MR. SAXE: Okay. That sounds
21 fine.
22 (WHEREUPON, there was discussion
23 off the record; and
24 a lunch recess was taken.)
25 MR. SAXE: I am advised that my
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1 office's records indicate the document
2 that Professor Jones referred to
3 earlier was produced along with the
4 original set of production of
5 documents. The original document that
6 we recovered is from Dr. Jones'
7 office. It's Bates number DLJ0000437
8 through 0000438.
9 I was not able to make any copies
10 of this document at lunch, but I have
11 the original here. If you're careful
12 with it, you're welcome to take a look
13 at it.
14 MS. STINSON: There it is. Let
15 me check it out.
16 MR. SAXE: Did you find a copy of
17 it in your collection?
18 MS. STINSON: We did. Thank you.
19 Q. (By Ms. Stinson) Dr. Jones, on Exhibit 8,
20 which we were talking about before lunch, on Page 7
21 there's "A summary of estimated annual subsidies
22 accruing to agriculture," correct?
23 You're not looking at the same page I am.
24 A. Page 7?
25 Q. It says --
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1 A. Oh, wait. This one has those --
2 Q. It's not the faxed Page 7?
3 A. This has a 6 and 7. Okay. We're now on
4 the same page, maybe.
5 Q. Okay. Can you tell me the number you have
6 for the Central and South Florida Flood Control
7 Project of 79 million; what is that figure? Where
8 is that from?
9 A. That number in the Central and South
10 Florida Flood Control Project, are you referring to
11 which number?
12 Q. 79.
13 A. 79. Okay. That is the number that I took
14 from a study that was done by a consulting firm. I
15 think they did this for the Wilderness Society.
16 Q. Is that a report by Craig Diamond, do you
17 think?
18 A. I can't be absolutely sure about it, but I
19 think that is correct. I do recall that name, and I
20 think that is the same document.
21 Q. Do you know -- can you tell me today what
22 that figure represents? Is that capital investment
23 and what period of time and --
24 A. No. I don't recall exactly what the $79
25 is. I believe that it is an annual figure which is
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1 estimated to represent the amount of benefit that is
2 received by all of agriculture in the EAA from the
3 construction and operation of the Central and
4 South Florida Flood Control Project.
5 Q. Do you believe it's both?
6 A. And that's the federal portion.
7 Q. But you believe it includes both the
8 construction costs, as well as the operation costs?
9 A. I think it may be -- what I think it is,
10 and I'd have to go back and reconsult my analysis
11 here, but I believe it is an annualized figure which
12 represents the annual cost of the construction and
13 operation.
14 Q. Do you know whether that figure is an
15 allocation of those costs among various
16 beneficiaries or whether it's the entire cost?
17 A. There was a -- in that report, there was an
18 allocation between agriculture and urban users; and
19 I believe this would be the allocation to
20 agriculture and their share.
21 Q. Did you perform any analysis of the
22 appropriateness of that figure, the $79 million
23 figure?
24 A. No. I studied the report that I had, which
25 was their -- I guess their final completion report,
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1 read the text, tried as best I could to determine
2 what that number was because I knew what I was
3 looking for from that and so to -- that's the extent
4 of the analysis. I didn't go beyond this report to
5 try to bring in any other evidence.
6 Q. What is the 23.7 million-dollar figure for
7 South Florida Water Management District from urban
8 taxpayers?
9 A. This is, again, a value that was reported
10 in the report that I used.
11 Q. The Wilderness Society?
12 A. The Wilderness Society Report, and it's
13 their estimate of the annual subsidy received by
14 agriculture producers. Because, as I recall, as
15 best I recall, there is a differential rate or
16 assessment or utility fee paid by agriculture on a
17 per unit of value basis than it is for -- if you're
18 an urban resident within the district.
19 Q. Do you know what the 23.7 million dollars
20 is spent for?
21 A. What it's spent for?
22 Q. Yeah. I understand the Central and South
23 Florida Flood Control Project is for the canals and
24 pumps and all of that stuff. What is the
25 23.7 million-dollar figure by the Water Management
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1 District spent for that is a benefit to agriculture?
2 A. I don't specifically recall the discussion
3 in the report of what the money is spent for. I
4 think, as I recall their approach, they looked at
5 water use, how much of the total amount of water
6 handled by the South Florida Water Management
7 District is for agriculture purposes and how much is
8 for urban purposes; and then, as I said, they also
9 looked at the charges that are paid by agriculture
10 as opposed to urban property owners.
11 Q. Are you saying then that it is for water
12 use, this 23.7 figure?
13 A. I think in terms of what it's spent for and
14 what its use is, I think it's for general operations
15 for the South Florida Water Management District.
16 Q. Have you made any independent evaluation as
17 to the reasonableness of this figure?
18 MR. SAXE: Objection to form.
19 "Reasonableness" in what sense,
20 Counsel, accuracy as a reflection of
21 what it purports to be,
22 "reasonableness" in the sense, it's
23 too much money to spend on South
24 Florida Water Management District?
25 I'm not clear on your question.
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1 MS. STINSON: Let me clarify.
2 Q. (By Ms. Stinson) Have you made an
3 independent assessment of whether this figure
4 accurately depicts agriculture's share of
5 South Florida Water Management District
6 expenditures?
7 A. I don't think that's what I -- I don't
8 think I said that's what it was.
9 Q. Okay. Try me again then.
10 A. I think they looked at two things: One was
11 the distribution of water use within the district
12 for agriculture and for other uses, urban uses. The
13 second thing they looked at was the rates that were
14 charged to agriculture as opposed to urban users.
15 And to the best of my recollection, there's
16 a difference. Agriculture is charged less than
17 urban users. And it's also, I think, true that
18 agriculture uses most of the water in the EAA -- I
19 mean, in the South Florida Water Management
20 District.
21 Q. So does this figure represent an
22 allocation -- I thought you said -- of the operating
23 expenses of the district; is that not correct?
24 A. I'm not sure I would characterize it as an
25 allocation of the operating expenses. I wouldn't
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1 characterize it in that way. I think it's a
2 combination of these two calculations and, in
3 essence, then, looks at how much agriculture pays
4 for the amount of water it gets as compared to how
5 much urban areas pay for the amount of water that
6 they use and subsequently the 23.7 million is an
7 annual -- estimated as an annual subsidy to
8 agriculture.
9 Q. Let me ask you about the 21.0 figure for
10 local government taxes. Can you tell me what those
11 funds are spent for?
12 A. Those are -- local tax collections would be
13 for the county, schools, and other taxing
14 jurisdictions within the region. So the expenditure
15 of those funds would be for their normal operations.
16 Q. Why does this amount to, in your opinion, a
17 subsidy to agriculture?
18 A. Well, the agriculture is taxed at a -- on a
19 different basis than other property; and this
20 estimate by the way, I think, is limited to
21 Palm Beach County, I believe. So what it looks at
22 is the school taxes, city taxes and so forth.
23 Q. Do you know whether or not it's true, first
24 of all, that agriculture land is taxed differently
25 throughout the State of Florida?
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1 A. I think this is a State law. So it should
2 apply throughout the State, unless there might be a
3 local option which could exist. But to my
4 knowledge, I have no knowledge one way or the other
5 on that.
6 Q. Have you made an independent assessment of
7 the reasonableness of any of the figures I have just
8 asked you about, the 79, the 23.7, and the 21.0
9 found in your chart on Page 7 of Exhibit 8, the
10 methods and assumptions used by the Wilderness
11 Society in coming up with those numbers?
12 MR. SAXE: Objection to form.
13 Which question do you want answered?
14 You asked about the reasonableness of
15 figures, and you asked about
16 methodology -- methodology and
17 assumptions. The reasonableness
18 question, again, brings up that same
19 problem I had before.
20 MS. STINSON: Let me clarify.
21 MR. SAXE: Thank you.
22 Q. (By Ms. Stinson) What I intended to say,
23 if I did not, was the reasonableness of the methods
24 and assumptions of arriving at those figures?
25 A. Well, I -- I'm not sure I understand.
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1 You're asking me, what were those or--
2 Q. Have you independently analyzed the methods
3 and assumptions used in developing those figures?
4 A. Beyond studying the documents from which
5 these figures came, and attempting to satisfy myself
6 that the methodology and assumptions were
7 appropriate I have not gone out and done another
8 independent analysis, collected data, made my own
9 estimate, and that kind of thing, except in the case
10 of local government taxes.
11 Q. Is that figure the 21?
12 A. The 21.
13 Q. For local government taxes, not from the
14 Wilderness Society report?
15 A. It's not form the Wilderness Society
16 Report, right.
17 Q. The other figures, based on your review of
18 the Wilderness Society report, is it your opinion
19 then that those figures are the result of a -- you
20 have assured yourself that those figures were
21 arrived at by reasonable methods and assumptions?
22 A. The -- I might point out that the price
23 support estimate is also, not from the Wilderness
24 Society.
25 Q. Right.
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1 A. We agreed on that?
2 Q. Right.
3 A. At the time that I did this document and
4 went through the Wilderness Society report to the
5 extent that they stated all of their assumptions and
6 methodology, which I found no reason at the time not
7 to use these numbers and make them consistent.
8 Q. You're sort of sidestepping my question
9 here. Let me try again.
10 Do you have an opinion as to whether the
11 methods and assumptions used by the Wilderness
12 Society in reaching those numbers were reasonable
13 methods and assumptions?
14 A. I'd rather not state a firm opinion. I
15 would say this, that for the purposes for which I
16 was developing this table and given my review that I
17 did of the Wilderness Society report in figuring
18 out, as best I could, how they came out with these
19 numbers, I felt they were satisfactory for the
20 purposes -- this report to Counsel.
21 Q. The 21 million-dollar figure for local
22 government taxes is from what source?
23 A. These were estimates that were made by
24 Mr. Irwin Hirschhorn from data that was -- from
25 local data.
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1 Q. And all you're saying by this figure, as I
2 understand, is that agriculture pays a lower rate
3 than other kinds of property in Palm Beach County?
4 A. No, I'm not saying that they pay a lower
5 rate.
6 Q. Well, what are you saying? Explain to me
7 again the derivation of this number.
8 A. I'm saying that their property against
9 which the tax rate is assessed is arrived at a
10 method that's different from that which is used to
11 find market value.
12 Q. Well, in essence, aren't you telling me,
13 then, that agriculture pays a lower rate than they
14 would for that property if it did not have the
15 agricultural exemption?
16 A. I'm saying they'd pay a lower tax. I
17 wouldn't say they would pay a lower rate.
18 Q. Lower tax?
19 A. Well, right. Or levy. The amount of levy
20 against agriculture is less.
21 Q. Can you walk me through the calculation of
22 the 21 million-dollar figure?
23 A. Okay. I can. I don't know if it's okay
24 for me to suggest --
25 Q. Sure, you can look at anything.
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1 A. -- to you that there is another document
2 that you have received which lays this out very
3 specifically.
4 Q. And I'm going to show you something which I
5 don't believe has been marked as an exhibit, but ask
6 you if this is the document that you're
7 referring to?
8 A. I believe this is it. Let me just check.
9 And there are two. You handed me two things.
10 Q. Okay.
11 A. This appears to be the document that I
12 submitted.
13 MS. STINSON: Let's have that marked
14 then, if we could.
15 (WHEREUPON, Exhibit No. 14
16 was marked for identification.)
17 Q. (By Ms. Stinson) What we had marked as
18 Exhibit 14 is the document from which you calculated
19 the 21 million-dollar figure on Exhibit 8; is that
20 correct?
21 A. It's the -- I didn't do the calculations.
22 They were --
23 Q. Go ahead.
24 MR. SAXE: Hold on.
25 MR. BURGESS: Are we just using the
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1 numbers and continuing to mark from
2 Lacewell's?
3 MS. STINSON: Yeah. We talked
4 about that earlier. You must have
5 been late.
6 (Laughter.)
7 MR. SAXE: Let the record reflect
8 laughter.
9 A. The actual calculations were done by
10 Mr. Hirschhorn.
11 Q. (By Ms. Stinson) The 21 million-dollar
12 figure is taken from Exhibit 14; is that correct?
13 A. That's -- well, yes.
14 Q. Explain that to me.
15 A. There's quite a few things in here.
16 There's a memo to Bob Rosenberg from
17 Irwin Hirschhorn. There are some calculations
18 there. There is a memo from me to Bob Rosenberg.
19 There is a copy of the State law. There's an
20 application form. So there's a whole bunch of -- a
21 whole lot of stuff there.
22 Q. But my question is -- really, I'm just
23 focusing on the 21 million dollars. If you can --
24 with that document, can you --
25 A. You can calculate the 21 million dollars,
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1 yes.
2 Q. Can you do that for me? I mean, just show
3 me how it's done with that document.
4 A. All right. Okay. In this calculation we
5 assume that there are -- we don't assume. The data
6 from the tax assessor's office indicates 743,190
7 acres of agriculture used land; and it's appraised
8 at a market value of an average of about $3,000 per
9 acre and which made a total value of the EAA acreage
10 of a little over 1.4 billion dollars.
11 In 1991, the land that was valued at -- for
12 agriculture use purposes at 344 million -- just a
13 little bit over that, about 344.5 million -- which
14 is just over 1 billion dollars less than it would
15 have been if it had been valued at market value.
16 If we use a mill rate that at the time Mr.
17 Hirschhorn evidently found to be 19.5, then the tax
18 loss to the taxing jurisdictions of the EAA would be
19 21,012 million dollars.
20 Q. Okay. Now, the item, the line item on
21 Exhibit 12 called "Central and South Florida Flood
22 Control Project" is an investment in infrastructure,
23 is it not, rather than a direct subsidy sort of
24 payment?
25 A. As I understand the values that are
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1 included in the Wilderness Society report, they
2 include both the investment in infrastructure in the
3 operating, the operating cost of the facility; and
4 it is not a -- I would agree. It is not a direct
5 payment of cash to farmers, if that's what the
6 question is asking.
7 Q. Is it unusual for government to establish
8 infrastructure to encourage private economic
9 investment?
10 A. Well, I'm aware of other instances where
11 this has been done, yes.
12 Q. For -- in areas other than agriculture, is
13 that not true?
14 A. The government has, on occasions, built
15 infrastructure -- assisted in building
16 infrastructure for industries other than
17 agriculture.
18 Q. Let me show you what's been previously
19 marked as Exhibit 11.
20 A. Do you want this one back at this time
21 (indicating document)?
22 Q. Yeah. Can you identify on the first page
23 of Exhibit 11 whose handwritten notes those are?
24 A. I don't recognize them.
25 MS. STINSON: This is the scratch copy
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1 of 12. Do you want to show him the
2 real one?
3 MR. SAXE: Yeah. Exhibit 12 is
4 right here.
5 Q. (By Ms. Stinson) I take it you were a
6 co-author of this document; is that correct?
7 A. Second author.
8 Q. Are you the person who had conversation
9 with Ron Lord at, I guess, USDA regarding the cost
10 of transportation included in the sugar price?
11 A. I did have such a conversation, yes.
12 Q. Can you describe for me that conversation
13 and the circumstances of it?
14 A. I called him, and it was basically for
15 clarification for an issue that had been raised at
16 the -- recalling my presentation at the
17 South Florida Water Management District board --
18 about whether or not transportation costs were
19 covered in this analysis.
20 I was basically double checking with
21 Dr. Lord to see if the way in which we had treated
22 transportation costs were done correctly.
23 Q. You had already decided on a method to deal
24 with transportation costs before you spoke with
25 Dr. Lord?
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1 A. We had, yes.
2 Q. How had you arrived at that?
3 A. Well, in the -- for this analysis, we used
4 the U. S. Sugar and Sweetner reports, in particular,
5 the June 1992, for our production and processing
6 costs; and from that, we knew that there was a --
7 included in those costs -- there was an allowance
8 for transportation of raw sugar from the mill to the
9 refineries.
10 It was, also, an allowance for cane
11 transportation; and, in addition to that, we reduced
12 the price, the 5-year average price, the New York
13 price, by one penny in order to have an additional
14 allowance for transportation costs.
15 Q. How did you, just on your own, decide on
16 just one penny?
17 A. I'm going to be quite honest with you and
18 tell you that I didn't decide that on my own.
19 Dr. Lacewell decided to do that --
20 Q. Did you discuss his reasoning?
21 A. -- at a time when I was out of the office.
22 We did discuss it, and he told me why he
23 did it.
24 Q. What did he tell you?
25 A. To be consistent with the other analyses
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1 that were being done.
2 MR. SAXE: Excuse me. Would you
3 reread the question, please.
4 (WHEREUPON, the requested
5 portion of the record was read
6 by the court reporter.)
7 A. He told me that he had looked at the
8 Hazen & Sawyer Report and they had taken this
9 approach and that he had discussed -- I believe it
10 was with Carl Woelche -- in some estimates that he
11 had made and that he had also done this -- reduced
12 this -- the 5-year average price is actually
13 22.19 cents per pound, New York. But as you'll see
14 in here, it's 21.19 and so he made a decision to
15 reduce the price.
16 It gave us -- well, that answered your
17 question, I believe.
18 Q. (By Ms. Stinson) Then you subsequently
19 talked to Dr. Lord about that decision; is that
20 correct?
21 A. That's correct.
22 Q. And what did Dr. Lord say about that cost
23 estimate?
24 A. He said that the costs of transportation
25 were included in the processing costs that are
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1 included in this Sugar & Sweetner Report, that there
2 is -- in the marketing cost, there is a weighted
3 average cost that covers transportation of raw sugar
4 from the mill to the refinery.
5 Q. Did he say anything about the cost estimate
6 to get from the refinery to the market, the
7 additional penny that you had decided upon?
8 A. I don't understand your question.
9 Q. Did you discuss with him your proposal to
10 subtract a penny from the 22.19 cents per pound to
11 account for transportation costs?
12 A. No. The only thing -- as best I recall,
13 the only thing that we discussed, were the
14 Sugar & Sweetner Report numbers and how they were
15 developed and what was included in there to cover
16 transportation costs.
17 Q. You didn't specifically say, "Should I
18 subtract anything from this price for transportation
19 when I'm looking at what the mills get?"
20 A. I did not ask him that specific question,
21 no.
22 Q. Did you ask him a question of that same
23 intent?
24 A. Well, as I testified earlier, we didn't
25 discuss the 1 cent deduction.
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1 Q. Do you know whether Dr. Lacewell discussed
2 that 1 cent deduction with Dr. Lord?
3 A. No, I don't know. If he did, he didn't
4 tell me about it.
5 Q. Would you agree with Dr. Lacewell that this
6 report is essentially a snapshot in time, not a
7 projection?
8 A. "Snapshot's" a pretty good word. It's used
9 quite a bit in the profession to talk about a
10 analysis that's done for one period in time, rather
11 than a dynamic analysis that moves through time.
12 So, yes, I would agree with him.
13 Q. The credit of just under a penny that is in
14 here for by-products, can you explain to me, I
15 guess, why that's called a "credit" or where those
16 materials are sold and whether there should be some
17 transportation costs deducted from that?
18 MR. SAXE: Objection to form.
19 Counsel, could you break that up?
20 MS. STINSON: Okay.
21 Q. (By Ms. Stinson) You can answer it if you
22 want, or I'll ask it piece by piece if you'd
23 rather.
24 A. Which part do you want me to answer?
25 Q. Why is that called a "credit"?
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1 A. Why is it called a "credit"? Well, I'm not
2 absolutely certain why they call it a "credit."
3 I could speculate.
4 Q. Please. I just don't understand why it's
5 called a "credit."
6 A. Well, I think the -- in the one case, you
7 have the price of raw sugar. Since it is something
8 of an administrative price, then let's call it a
9 "price."
10 On the other hand, from molasses, the gas
11 and the other by-products that the mills get when
12 they crush cane into raw sugar, it's my
13 understanding that those are not a part of the
14 administered market price for raw sugar.
15 So you call it a "credit" -- in some cases,
16 I've seen USDA, in some instances, handle that as if
17 it were a credit against cost. Rather than adding
18 it to the price, they use it as a "credit" so it's a
19 reduced -- in essence, reduce the cost of production
20 in processing.
21 So the term, itself, may be somewhat
22 ambiguous; but it, nevertheless, is a penny that
23 produces income for the mill and growers and --
24 Q. Do you know where or how those items are
25 sold?
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1 A. I don't really have a great deal of
2 detailed knowledge about the marketing channels for
3 those by-products.
4 Q. Do you know whether the mills would have to
5 pay transportation costs out of that to get those
6 products somewhere?
7 A. I don't know.
8 Q. Let me show you a document that looks a lot
9 like 11, except it has more handwriting on it and
10 ask you, again, if you can identify the notes, first
11 or subsequent pages.
12 MR. SAXE: Would you repeat the
13 question?
14 Q. (By Ms. Stinson) I'm showing him a
15 document that looks a lot like Exhibit 11, except
16 that it has more handwriting in it; and I'm asking
17 him if he can identify that handwriting.
18 A. Some of that handwriting is mind.
19 MS. STINSON: Well, then, let's have
20 this marked as 15.
21 (WHEREUPON, Exhibit No. 15
22 was marked for identification.)
23 Q. (By Ms. Stinson) You've got Exhibit 15?
24 A. Okay.
25 Q. Can you identify for me what notes are
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1 yours?
2 A. On the first page, the note in the upper
3 left-hand corner by the first block of numbers is
4 mine.
5 Q. What's it say?
6 A. It says, "FSL reproduction of H & S."
7 Q. Which means?
8 A. What did I mean when I wrote it?
9 Q. Yes.
10 A. That's a note to myself that, as I
11 understand this first block -- what that is, is a
12 Florida Sugar League's reproduction of
13 Hazen & Sawyer's results.
14 Q. All right. Is anything else on this first
15 page yours?
16 A. No.
17 Q. Is this your handwriting on the next page?
18 A. It would appear to all be mine.
19 Q. What does the note at the top say?
20 A. It says, "Risk is implicit in the cap. rate
21 that produces a value of land."
22 Q. What does that mean?
23 A. I don't have -- I don't have a specific
24 recollection of what I was thinking about when I
25 wrote that. I think it's an accurate statement.
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1 What it says is that, when you develop a
2 capitalization rate for finding the value of land
3 through the income approach to value, that risk is
4 one of the components that's included -- generally
5 it's included in the capitalization rate.
6 Q. On Point 1 you say, "definitely not," to a
7 note that says, "FLIPSIM is the best model and
8 should be fully utilized."
9 A. Right.
10 Q. Are there better models? Why is FLIPSIM
11 not the best model?
12 A. This is the first instance, to my
13 knowledge, that FLIPSIM has ever been used in a
14 study of this type, an economic impact study of this
15 type.
16 Q. What drawbacks are there to FLIPSIM for
17 this type of analysis?
18 A. Well, first I should say here, let's go
19 back and qualify this with the fact that there
20 are two FLIPSIMS at issue, or at least two ways that
21 you can run FLIPSIM. One is in a static mode, and
22 the other is in a stochastic mode.
23 If FLIPSIM is run in the static mode, then
24 it can perform a function sort of like a
25 spreadsheet, and may be suitable in that regard.
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1 This comment "definitely not," to the best
2 of my recollection, I'm pretty sure this is correct
3 as my criticism or my statement -- my disagreement
4 relates to the use of the stochastic FLIPSIM in an
5 economic impact analysis.
6 Q. Which did Hazen & Sawyer use?
7 A. She used the static model.
8 Q. And as you mentioned, that model would be
9 appropriate for an analysis such as this?
10 A. Yeah. I don't know of it ever being used
11 in that regard, and I really don't know how much
12 modification or changes or manipulations and so
13 forth that Hazen & Sawyer had to do in order to use
14 FLIPSIM as opposed to some other models that are --
15 many of which are spreadsheet-based, and basically
16 accounting models that allow you to come up with the
17 direct impacts in an economic impact study.
18 Q. Other than the fact that it hadn't been
19 used before to your knowledge, is there something
20 inherently wrong with using it for an impact
21 analysis, the static FLIPSIM?
22 A. In the static mode, except for the fact
23 that you do have to make -- be sure that you make
24 certain adjustments in the model as it's
25 configured -- as it comes off the assembly line or as
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1 it comes off the computer -- in the static mode, I
2 would see -- there's no inherent reason, I believe
3 that was your question?
4 Q. Right.
5 A. -- (continuing) why FLIPSIM couldn't serve
6 the purpose. In fact, we have evidence that
7 Hazen & Sawyer used it successfully.
8 Q. Are there other models better suited to
9 this type of analysis?
10 A. I think that there probably are some others
11 that -- we're kind of throwing the term "model"
12 around somewhat loosely here, and as it's always
13 thrown around loosely; but I think there are maybe
14 some other computer techniques that might be more
15 convenient for doing the kind of analysis that needs
16 to be done for an economic impact analysis.
17 Q. What are those?
18 A. Well, I would suggest a Lotus spreadsheet,
19 Excel on the MacIntosh, all of these have all of the
20 characteristics that are required that you'd need in
21 order to build the kind of direct impact estimation
22 that you need and are convenient to use.
23 Q. I believe you indicated that, in your
24 opinion, it would be inappropriate to use the
25 FLIPSIM stochastic model in an impact analysis such
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1 as this.
2 Tell me why and what the problem is with
3 that.
4 A. Well, let me say it this way. It depends
5 on, I guess, how you use the stochastic FLIPSIM.
6 The stochastic model has in it a series of
7 probability distributions and so forth that are used
8 to look at a number of factors which relate more to
9 an individual firm and the financial characteristics
10 of that firm and the change in those financial
11 characteristics, rather than looking at estimating
12 what is required for the economic impact analysis.
13 Q. Why is looking at an individual firm not
14 appropriate for doing the impact analysis?
15 MR. SAXE: Objection to form.
16 I assume you mean the economic
17 impact analysis of the type done here
18 by Hazen & Sawyer?
19 MS. STINSON: Correct.
20 A. Economic impact analysis arises -- or
21 economic impacts arise from changes that occur in
22 the industry, the target industry, and not
23 necessarily from what happens to an individual
24 firm.
25 Q. (By Ms. Stinson) Could there be economic
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1 impact generally from the effect on individual firm
2 or owner in a given area?
3 A. Well, the key to economic impact in this
4 application -- in the application of the EAA -- is
5 that what you want me to talk about or just economic
6 impacts in general?
7 Q. Tell me about the EAA.
8 A. In the case of the EAA, when we're talking
9 about agriculture, and we have a number of growers
10 and a number of different operators, the key to
11 economic impact is what happens to that industry; in
12 particular, what happens to land use and the -- and
13 whether or not land stays in production, goes out of
14 production, or is shifted to an alternative use from
15 what it's currently being used for. That's the key
16 variable in doing the economic impact analysis in
17 this case in the EAA.
18 MR. SAXE: Counsel, I don't mean to
19 interrupt the question or anything,
20 but I'd like to take a break. If you
21 want to finish up this line or
22 something like that.
23 MS. STINSON: No. Go ahead.
24 (WHEREUPON, a recess was taken.)
25 Q. (By Ms. Stinson) Is ownership structure in
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1 terms of individual owners who owns the land of
2 importance at looking at impacts to the community?
3 A. Is who owns the land important to impacts
4 of the community?
5 Q. Right. If it's kept in production?
6 A. I don't believe that's something that we
7 frequently look at in economic impact analysis, and
8 that is, who the owner happens to be.
9 MR. SAXE: Would you read back
10 Counsel's original question, please.
11 (WHEREUPON, the requested
12 portion of the record was read
13 by the court reporter.)
14 Q. (By Ms. Stinson) Are you saying, then,
15 that, for example, in one of the communities in the
16 EAA, such as Belle Glade, it would not matter
17 whether there was a local owner or an Atlanta bank
18 who owns the property so long as it's kept in
19 production?
20 MR. SAXE: I'm just going object to
21 form.
22 Counsel, in your line of
23 questioning, you've conflated
24 ownership structure with who owns the
25 land; and as the witness asked for
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1 clarification and you assented to the
2 clarification, the line of questioning
3 has shifted to the issue of who owns
4 the land.
5 I just want it clear that we have
6 compound questions here, and it can
7 get confusing which one is being
8 pursued.
9 Q. (By Ms. Stinson) Do you understand my
10 question, Dr. Jones?
11 A. Could you ask it again.
12 Q. Does it matter --
13 MS. STINSON: Well, go ahead and read
14 it back.
15 (WHEREUPON, the requested
16 portion of the record was read
17 by the court reporter.)
18 MR. SAXE: Objection to form.
19 A. Do you mean, it wouldn't matter in terms of
20 economic impacts on the community?
21 Q. (By Ms. Stinson) Right or socio-economic
22 impacts?
23 MR. SAXE: Objection to form.
24 Which one do you want answered?
25 Do you think they're both the same, or
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1 which one do you want answered?
2 MS. STINSON: I want them both
3 answered, economic and then
4 socio-economic.
5 A. We'll take the economic, and I'm going to
6 speak to what I think those mean because, in my
7 opinion, economic impact is fairly clearly defined
8 and widely accepted in the profession.
9 On the other hand, socio-economic impact,
10 to me, is not a really clearly-defined theoretical
11 term; and you see a lot of different reports that do
12 a lot of different things, get paraded out before
13 the profession under the boundary of socio-economic
14 impacts.
15 Now, with that disclaimer, let's talk about
16 economic impacts. Local owner versus an Atlanta
17 bank. What would cause economic impacts to be
18 different under those two circumstances?
19 The land is still in production. I assume
20 you mean that it's still in production in the same
21 crop. The Atlanta bank either has an operator or
22 they lease this land out to an operator who's
23 growing sugar using typical management practices
24 within the EAA, then I would assume that he would
25 hire about the same number of people; he would pay
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1 about the same amount of wages to the workers. And
2 as far as purchasing patterns of inputs, which is
3 another factor that could affect the economic
4 impacts, then I see no inherent or underlying reason
5 to suspect that the Atlanta bank would have
6 different purchasing patterns.
7 Those are where economic impacts arise
8 from, the purchasing pattern of inputs, the wages
9 paid, and so forth. And so with those in mind, I
10 will say that I certainly wouldn't have any reason
11 to conclude that the impacts would be different.
12 Q. (By Ms. Stinson) What about from a
13 socio-economic standpoint?
14 A. Okay. Socio-economic impacts, if you'll
15 let me define those as an extension of economic
16 impacts. When we're looking further at the fiscal
17 impacts, the revenues, and costs to government, to
18 local government -- such as the schools, city
19 government, county government, in particular, and
20 then the demand for services, for school services,
21 for hospitals, for police and fire protection, and
22 these kinds of things then -- again, I'm assuming
23 that the Palm Beach County and the Hendry County tax
24 collectors would require the Atlanta bank to pay
25 taxes as the local owner has to pay. And there's no
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1 reason, that I can see, to suspect that ownership,
2 itself, only and solely, would cause the demand for
3 services within the local area to change or for the
4 revenues to support those services to change
5 significantly so long as the land stays in
6 production.
7 Q. You still have Exhibit 15 in front of you?
8 A. Yes, ma'am.
9 Q. On the left, by No. 2, you have a star and
10 say, "maybe run high and low within USDA ranges."
11 What do you mean by that?
12 A. This was a note to myself and I was
13 thinking with my pen, I guess; and when I read the
14 yield risk -- and just thinking that would be one
15 alternative that could be done in an analysis would
16 be to take a look at some ranges on yields for a
17 certain period of time between the high and the
18 low.
19 Q. And under the column that has the heading,
20 "H & S position," for Nos. 1, 2, and 3 you have a
21 comment about, "no change, or no change for
22 10 years."
23 What does that refer to? Do you recall?
24 A. Again, that's a note to myself. And I
25 don't have a clear recollection of what I was
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1 thinking about at the time when I wrote that note,
2 but it would appear that my comment means that
3 there's been little or no -- there's been very
4 little variation in yield over the last 10 years.
5 Q. To the right of Row 2 you have, "Why is
6 risk not important: 1) must look to the expected
7 value; 2) empirical results."
8 What do those notes mean?
9 A. Again, it's a note to myself as to why I
10 think the risk is not an important factor to
11 consider in this case. One is we're trying to
12 estimate economic impacts for an entire region over
13 a period of time year by year. This is the way that
14 Hazen & Sawyer did the analysis. If you're going to
15 do that, then you have to look at the expected value
16 for that region for each of those years. The
17 expected value is the mean, and that's what my
18 indication there is under No. 1.
19 And, secondly, simply that the empirical
20 results do not show a great deal of variation in
21 yields or prices for sugar in recent history.
22 Q. Row 3, am I correct in reading your note to
23 the left, "Explain to board bankruptcy for some,
24 others buy out"; is that right?
25 A. That's what it says, yeah.
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1 Q. And to the right, you have underlined,
2 "15 percent to 70 percent with N.B."?
3 A. Uh-huh.
4 Q. What does the "N.B." refer to and why?
5 A. I'm not absolutely sure. That's a symbol I
6 used to use taking notes in college. It must have
7 been very important.
8 Q. You also have a note that says, "Average
9 debt in Florida, $20 per acre"?
10 A. Uh-huh.
11 Q. Where is that information from?
12 A. Again, I'm going to have to answer by
13 saying that I'm not absolutely sure where I got that
14 information. I think it was in conversations with
15 some of the other parties working on the case, but I
16 can't be sure.
17 Q. Row No. 4 by your comment, "absolutely
18 not," with emphasis, you intend to say that income
19 taxes do not need to be included?
20 A. That's right. Income taxes are a function
21 of income, not the other way around; and as I
22 understand the proposal here by Dr. Polopolus and
23 Richardson is that we have to treat income taxes as
24 a cost of operation. I don't know of any businesses
25 that operate that way.
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1 The way my income taxes are computed is I
2 figure up the income and they tax it; and if there's
3 no income, there's no tax. If the income is high,
4 there's a high tax.
5 So I don't -- I can't see the argument for
6 including income taxes as a part of the calculations
7 to whether or not land is going to stay in
8 production and stimulate economic impacts.
9 Q. Point 5 you have written, "not relevant for
10 economic impact analysis." What is "not relevant"?
11 What are you referring to?
12 A. Farm -- the farm survival criteria.
13 Q. As opposed to acreage out of production?
14 A. Right.
15 Q. That we've already discussed?
16 A. That note is referring to the farm survival
17 criterias as not being relevant to economic impact
18 analysis.
19 Q. You have a comment to the right that says,
20 "Are medium farms indivisible?"
21 Did you get an answer to that question?
22 MR. SAXE: Objection to form.
23 A. It's a question to myself, so --
24 Q. (By Ms. Stinson) Did you obtain an answer?
25 A. -- as best I recall, I haven't answered my
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1 question yet.
2 Q. Okay.
3 A. The point goes to an argument that
4 Dr. Polopolus and Richardson are making, and that is
5 that small farm acreage is acquired by large and
6 medium farms and large farms unable to acquire
7 medium farms.
8 This seems to be an assumption that they
9 made in their analysis; and my question is, are
10 medium farms indivisible? You can't acquire all of
11 it. Why not divide it and acquire half of it.
12 Q. No. 6 to the left you have,
13 "20-year-look at 2 to 3 scenarios."
14 Scenarios of what?
15 A. That, again, was probably crystal clear to
16 me when I wrote it down; and the crystal has become
17 a little bit foggy. But I think that I was, the
18 best I recall, I was thinking of some various
19 scenarios in terms of prices, costs and so forth.
20 Q. Do you believe that for the 20-year
21 analysis it would be a good idea to look at a couple
22 of different scenarios?
23 A. Within the constraints of the time and
24 resources that you have in doing an economic
25 projection, I think it's always a good idea to do
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1 some scenarios rather than a single point
2 projection.
3 Q. Under the column titled, "H & S Position"
4 for No. 6, would you read to me your first line
5 there?
6 A. I'm not with you now.
7 Q. Row 6 --
8 A. Row 6, okay.
9 Q. -- the second column, it looks like,
10 "no delta for ten years"?
11 A. Right. That was --
12 Q. What's a "delta"?
13 A. A change. That's my shorthand for change
14 and there, again, is a note as I was reading this
15 and I think I was referring to the fact that there
16 was little change in the price for ten years.
17 Q. And No. 7 to the right you have, I believe,
18 "hokem," what --
19 A. "Hokem-jokem, forget it."
20 Q. "Hokem-jokem, forget it." What does that
21 refer to?
22 A. It's said that economists are economists
23 because they don't have the personality to be
24 accountants. Sometimes you have to try to have a
25 little fun.
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1 Q. Was there something specific you were --
2 A. Yeah, integration of mill and growers is
3 not appropriate. That just sort of stimulated a
4 thought that I don't think that statement is
5 correct.
6 I think that the EAA sugar industry between
7 producers and the mill is highly integrated, and I
8 think that's an important factor in this economic
9 analysis.
10 Q. Would you turn the page.
11 A. (Witness complies.)
12 Q. No. 8 you have, "No delta in analysis." Do
13 you know what you meant by that?
14 MR. SAXE: Counsel, for the record,
15 when you say, "no delta," you're
16 referring to that triangular symbol?
17 MS. STINSON: Yeah.
18 Q. (By Ms. Stinson) Is that a delta? Is that
19 what you mean?
20 A. Yes. That is a --
21 (WHEREUPON, there was discussion
22 off the record.)
23 A. That's a triangle, and it's just shorthand
24 for "change." What that means to me, and I think
25 what it meant at the time I wrote it, was that I
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1 wouldn't change the analysis in the way that Hazen &
2 Sawyer treated mill efficiency.
3 Q. (By Ms. Stinson) Are you referring to the
4 assumption of the
5 2 percent productivity increase per year?
6 A. Part of which is mill efficiency, part of
7 which could be other factors. The trend that she --
8 as I recall, the trend that she makes during that
9 period is really, simply a trend in the sugar -- raw
10 sugar production per acre, if I'm not mistaken.
11 That could include mill efficiency
12 extracting more sugar from the cane harvested; but
13 it could also mean higher yield in the cane, itself,
14 more biomass per acre and so forth.
15 So the 2 percent that she projected does
16 not relate just to mill efficiency. It would relate
17 to other things, as well; although, I would agree
18 that a significant part of it probably is mill
19 efficiency.
20 Q. You have the comment, "20-year must trend
21 mill efficiency."
22 Are you saying that this 2 percent should
23 be continued in the 20-year analysis?
24 A. Well, I think what the comment says is that
25 there should be a trend in mill efficiency, whether
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1 it's 2 percent or over that entire period or whether
2 it's some other rate, I think that that needs to be
3 looked at; but I think there's reason to believe
4 that mill efficiencies will continue, and so that
5 would be an important factor in the economic impact
6 analysis.
7 Q. Have you independently reviewed the figure
8 used in the 10-year analysis of a 2 percent per year
9 productivity increase?
10 A. The only thing that I've done is to go back
11 and look at it in the report, itself, and read the
12 text that is in the Hazen & Sawyer report; but,
13 also, looked at some other documents to see if I
14 could verify or satisfy myself that there is an
15 efficiency trend underway.
16 Q. Have you done that?
17 A. Yes.
18 Q. And have you independently calculated the
19 2 percent figure?
20 A. No. No, I didn't independently calculate a
21 trend figure, myself.
22 Q. What other documents, besides the
23 Hazen & Sawyer report, did you consult on that
24 issue?
25 A. There were two things that, I guess, that I
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1 should mention. One is the Sugar and Sweetner
2 Report, which I think is June of 1992. Now, it does
3 not do a trend analysis -- a statistical trend
4 analysis, but they do plot the processing costs, as
5 well as production costs, over -- I believe, it's
6 the last -- I can't remember the exact time period --
7 but I think it's the last, maybe 20 years; and it
8 definitely shows a downward trend in the cost of
9 processing raw sugar and the cost of producing it.
10 And there's text in that report, as well,
11 which Buzzanell and Lord state the processing in
12 production costs are declining in the EAA or in
13 Florida.
14 Q. I thought, though, we were talking about
15 pounds of sugar per acre, not cost of production.
16 Does the 2 percent --
17 A. Well, we are; but the two are very closely
18 interrelated in that the cost of raw sugar per acre
19 is influenced not only by what you have to pay for
20 things that you use to produce it, but also what
21 your yield is, how much raw sugar you are able to
22 extract per acre. And I think that's one of the
23 important factors in this declining cost.
24 Q. Well, have you looked at any other
25 documents or information specifically on the pounds
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1 per sugar -- pounds per acre of sugar?
2 A. The other document that I have seen is an
3 article that was written by Dr. Polopolus and some
4 others in which he makes a statement that -- I
5 believe this is correct. This is, again, to the
6 best of my recollection, that 20 percent increase in
7 mill efficiencies are achievable in the future.
8 Q. Do you recall what document that is, what
9 report?
10 A. It is an IFAS publication. I think maybe
11 it was written for the periodical that they publish
12 from the Department of Agricultural Economics.
13 Q. At the University of Florida?
14 A. Yes. So those are the two that led me to
15 write that note, I think.
16 Q. Do you have any opinion as to what the
17 trend is in mill efficiency?
18 A. I only have the knowledge of the
19 information that I've been able to glean from these
20 reports that I've mentioned.
21 Q. Have you calculated a trend, yourself?
22 A. No, I have not.
23 Q. On down the page you have,
24 "labor-mechanical equals wash equals break-even
25 case." Am I reading that correctly?
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1 A. Right.
2 Q. What does that refer to?
3 A. I think it refers to this statement that's
4 made here by -- I assume this is made by
5 Dr. Polopolus and Richardson which says, "Trend
6 toward mechanical harvesting not reflected."
7 This is a note, again, to myself that
8 reflects my understanding of the relationship
9 between changes in sugarcane production in the EAA,
10 as you move from labor harvesting to mechanical
11 harvesting, that it's basically a break-even case.
12 That's what I mean by "wash." It does not
13 increase the cost. It does not decrease the cost.
14 Q. What are you basing that on?
15 A. I'm basing it on some testimony that was
16 given in a deposition, I believe, by Mr. Wedgworth,
17 who is with the Sugar Cooperative in the EAA. And
18 they have gone -- I believe they have gone over the
19 last few years completely to mechanical harvesting,
20 and he testified that it had not changed their costs
21 significantly.
22 Q. Is there anything else upon which you base
23 your conclusion there?
24 A. There are some statements, as I recall in
25 one of the Sugar and Sweetner reports, that speak to
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1 the substitution of mechanical harvesting for labor
2 harvesting; and what they talk about there are some
3 trade-offs.
4 There are some differences in the way cane
5 has to be handled, but there are, also, trade-offs
6 in costs; and so, as best I recall, it is also their
7 conclusion that there is no great difference in cost
8 as you move from labor harvesting to mechanical
9 harvesting.
10 Q. The next comment you have circled, "3 to 4
11 percent," and comment, "FSL agrees here exclamation
12 mark, question mark, what about before the board?"
13 What does that comment relate to?
14 A. I'm not clear -- it's not clear to me what
15 they're talking about there. They've got "exogenous
16 variables," and they say, "inflation H & S uses 2.5
17 percent, 3 to 4 percent may be supportable."
18 I don't know if they're saying that what
19 should be inflated at 3 to 4 percent or just what
20 that means.
21 However, I do recall that before the
22 South Florida Water Management District board that
23 Dr. Polopolus and Dr. Richardson criticized
24 Hazen & Sawyer for using some of the trends that
25 they used and if they're --
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1 Q. A trend regarding 3 to 4 percent inflation?
2 A. The trend that we were just talking about.
3 The trend in mill efficiency, and I wasn't really
4 clear here whether they were talking about that or
5 whether they were talking about something else.
6 Q. The last comment on that page -- I'm not
7 sure I can read it. Can you read that to me?
8 A. Which one, down in the right-hand corner?
9 Q. "Baseline," something.
10 A. "Baseline drops more or less equals to a
11 hundred dollars." I'm not real sure what the $100
12 means, but that relates to this statement about the
13 longer planning revising should be considered.
14 Q. If you'd turn the page. Attached to this
15 analysis is a draft copy of a FARPI article?
16 A. Uh-huh.
17 Q. An analysis of the "Dunkel Text on
18 Agriculture." What is the Dunkel proposal?
19 A. It's my understanding, in general, that the
20 Dunkel proposal sets out the parameters from which
21 members of GATT would begin to modify or change
22 their internal supports, their internal programs
23 that support agriculture as moving -- as a condition
24 of moving toward freer trade under GATT.
25 Q. Let me ask you to turn to page -- the
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1 easiest thing is to give you the Bates No. 23.
2 A. Okay.
3 Q. The paragraph that's marked there ends with
4 a sentence that says, "Although the assumptions made
5 are very important for the entire analysis, this is
6 nowhere more true than for sugar."
7 Can you explain that to me.
8 A. Well, I can't explain it without maybe
9 reading some of the additional text.
10 Q. Okay.
11 A. And then I'm not going to guarantee it
12 then, but I'll try.
13 Q. Okay.
14 MR. SAXE: Counsel, for the record,
15 this is not Dr. Jones' document here
16 that you're asking for explanations on.
17 Q. (By Ms. Stinson) Well, let me back up.
18 Have you reviewed this document, Dr. Jones?
19 A. I recall reading it through, scanning
20 certain parts of it in probably more detail than
21 others.
22 Q. Have you utilized the information that you
23 got from this document in any fashion in any of your
24 work?
25 A. I don't recall any analyses that I've done
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1 or documents that I've produced that would use any
2 of this directly.
3 Q. What about indirectly?
4 A. Well, without being flippant, I assume I've
5 indirectly used everything that I've learned from
6 the cradle on; but I think the answer to that would
7 probably be, no, that I have not used this material
8 in my analysis.
9 Q. Okay. Well, then let's skip it. Earlier
10 you referred to an article which you made use of by
11 Rausser.
12 I don't think we need to necessarily mark
13 this, but let me show you a document entitled
14 "Alternative Agricultural and Food Policies in the
15 1985 Farm Bill."
16 Is that the article you referred to?
17 A. Yes. I don't remember the thing that we
18 were talking about at that time, but I do remember
19 referring to this article earlier today. It's by
20 Gordon, Rausser and Ken Farrell.
21 Q. Did you utilize the information from that
22 report in your Exhibit 8?
23 MR. SAXE: Can we see Exhibit 8,
24 please?
25 MS. STINSON: Yeah. That's my
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1 copy of it.
2 A. I'm going to have to look at it in order to
3 answer that question. The first time that I read
4 this, was in relation to the request that I told you
5 about that Dr. Johns had made that I look at some --
6 review the literature on sugar policy and what the
7 impacts might be if we went to freer trade. I don't
8 recall specifically using it in the development of
9 any of these numbers, but I may have.
10 Q. (By Ms. Stinson) Well, let me see if I can
11 jog your memory. I believe you mentioned that
12 article in supporting your conclusion that, I
13 believe, that the sugar industry in Florida might
14 not operate without the price supports, which is
15 reflected in Exhibit 8.
16 A. All right.
17 Q. Would that article, that Rausser article --
18 was that one of the items you used in reaching that
19 conclusion in Exhibit 8?
20 MR. SAXE: I'm going to object to
21 form, Counsel. It's on
22 characterization basis.
23 During the questioning and
24 answering on this document on
25 Exhibit 8, there were various
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1 statements, sentences read that had
2 been altered by Dr. Jones and
3 questions asked about them.
4 Dr. Jones then testified that he
5 had reviewed subsequent material and
6 that there had been some possible
7 change in his conclusions.
8 So when you refer to the
9 conclusion, I just want to make clear
10 whether you're referring to the
11 statements in this document or
12 subsequent opinions.
13 MS. STINSON: Well, let me make
14 it more generic.
15 Q. (By Ms. Stinson) With regard to the
16 ability of the Florida sugar industry to exist
17 without the sugar program, would you have considered
18 the Rausser article?
19 A. I did consult this document and what this
20 document basically does is to look at the sugar
21 program in the United States and the cost to
22 consumers and the benefits to producers and it
23 analyzes several alternative programs that might be
24 used for the sugar industry, other than the one that
25 we have at this time.
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1 Q. With regard to your review of U.S. sugar
2 policy and its effects on the sugar industry in the
3 EAA, did you also consult working paper No. 563 by
4 Andrew Schmitz and James Vercammon?
5 A. This one was -- I reviewed this article
6 primarily for the purpose of preparing the document
7 to Dr. Johns.
8 Q. Okay. The one with regard to the
9 14 or 16 cents?
10 A. Trying to look at what would be a
11 reasonable price range to expect for sugar in the
12 U.S. if there was a liberalization of trade.
13 Q. Have you, also, reviewed a paper entitled,
14 "Cuba's Sugar Industry in the 1990's, Potential
15 Exports to the U. S. & World Markets," by
16 Jose Alvarez?
17 A. Yes, I did.
18 Q. Would you agree that the future
19 relationship between the United States and Cuba may
20 well have a significant role on both sugar policy
21 and sugar production in the United States?
22 A. It's a statement similar to what I disagree
23 with. I would say that for Cuba, I guess, or any
24 other country. I don't know. There are a lot of
25 unknowns in that question. I don't quite know how
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1 to answer all parts of it.
2 Q. Well, let me back up. Isn't it true that
3 sugar production in the United States expanded
4 significantly in response to the Cuba embargo of
5 1960?
6 A. It is true that beginning in about 1960,
7 sugar production in the United States expanded
8 significantly.
9 Q. Would you not agree that that was in large
10 part prompted by the elimination of imported sugar
11 from Cuba?
12 A. I would agree that there probably is a
13 relationship. Cuba had been, up to that time, it is
14 my understanding, a major supplier to the
15 United States sugar market; and at the time that the
16 United States imposed an embargo on Cuba, then that
17 meant that we lost a major player in the entire
18 supply side of the U.S. sugar market.
19 Subsequent to that, expansion began in the
20 U.S.
21 MR. BURGESS: What's the Bates
22 number?
23 MS. STINSON: 168.
24 Q. (By Ms. Stinson) Read along with me. The
25 last sentence of the first paragraph which reads
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1 "Florida's agricultural production and geographical
2 proximity to Cuba will make her a major player once
3 commercial ties are reestablished."
4 Would you agree with that statement?
5 MR. SAXE: Where is that statement?
6 MS. STINSON: It's the last sentence
7 of that first paragraph.
8 MR. SAXE: Okay. Thank you.
9 Well, I object to form. Without
10 some clarification or context, it's an
11 unclear antecedent. Who's "her?"
12 "Will make her a major player,"
13 Florida, Cuba?
14 If you want to read the
15 paragraph, then that's fine, Counsel.
16 Q. (By Ms. Stinson) Well, let me just ask it
17 differently. Given the response of U.S. sugar
18 production to the Cuban embargo in 1960, do you
19 believe or not believe or not have an opinion with
20 regard to the effect reestablishment of commercial
21 ties with Cuba could have on the U.S. sugar
22 industry?
23 MR. SAXE: Well, I'm going to object
24 to form.
25 Your reference to "The response
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1 of U.S. sugar production to the Cuban
2 embargo," I don't believe that Dr.
3 Jones testified as to a cause/effect
4 connection.
5 He testified that Cuba had been a
6 major supplier and after the embargo,
7 no longer was.
8 But you can answer the question.
9 A. Well, it's the cause and effect in the
10 question that's bothering me, as well; and that is,
11 the way you started the question was to say, given
12 the rapid increase in Florida sugar growth after
13 Cuba was no longer a supplier, does this
14 necessarily -- it seems to me what you're asking me,
15 does that necessarily imply that if we were to
16 improve our diplomatic relations, that Cuba would
17 automatically become a major supplier again.
18 Is that what you're asking?
19 Q. (By Ms. Stinson) First of all let me ask:
20 Do you disagree that a major cause of increased
21 sugar production in Florida in the 60's was the
22 Cuban embargo?
23 A. Could you read the question again, please.
24 (WHEREUPON, the requested
25 portion of the record was read
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1 by the court reporter.)
2 A. There were several things that happened at
3 about the same time as the embargo. It's my
4 understanding -- I think, again, this is based on
5 testimony from Mr. Wedgworth, that Puerto Rico
6 essentially dropped out of the sugar supply
7 business. I think that, combined with the Cuban
8 embargo, certainly provided an opening for someone
9 to move in and fill this supply void; and it would
10 appear that Florida producers did that.
11 Q. Do you have any opinion about the possible
12 or likely effects of improved commercial relations
13 with Cuba should they occur?
14 MR. SAXE: Objection to form. It's a
15 vague question.
16 Q. (By Ms. Stinson) You can answer it anyway,
17 if you can.
18 A. All right. Let me see if I can understand
19 what you're asking. You're asking me if we improved
20 diplomatic relations -- let's say, what, remove the
21 trade barriers? Remove the quotas on U.S. sugar?
22 Q. Or lessen them significantly, yes, with
23 respect to Cuba.
24 A. With respect to Cuba. Allow them access to
25 the U.S. market?
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1 Q. Right.
2 A. Well, I think a lot of things have happened
3 since 1960 to the Cuban industry and some of these
4 are pointed out in Mr. Alvarez' document and as well
5 as some that I've read relating that were published
6 by the people in the Sugar and Sweetner division at
7 ERS.
8 They don't have the same mill capacity that
9 they had at the time in 1960 -- in 1960, virtually
10 all of these -- it's my understanding that virtually
11 all of the sugar production and milling in Cuba is
12 owned by U.S. interest, and it was a fairly
13 efficient industry compared to the rest of the
14 world.
15 It's, also, my understanding from what I've
16 read, that efficiency has declined dramatically,
17 that their mills are in a much worse state of
18 disrepair than they were at that time.
19 So I don't think we can -- we're not -- I
20 don't think we can expect to go back up the same
21 curve that we went down, so to speak. There are too
22 many structural changes within the industry. There
23 are other overriding public policies within Cuba
24 that could affect their ability to supply sugar.
25 But having said that, given their location
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1 to the United States, then I think there's probably
2 little doubt that if we gave them the opportunity
3 that they would very much like to ship an increased
4 amount of sugar to the United States.
5 Q. Okay. Let me have that.
6 A. (Witness complies with document.)
7 Q. Earlier you indicated that you met with
8 Hazen & Sawyer people before they met with the
9 League economists several months ago and then again
10 afterwards; is that correct?
11 A. That's not -- I want to correct myself.
12 My recall was that we met in
13 Hazen & Sawyer's offices in -- and on reflection, I
14 don't believe that's correct. I think we met in
15 West Palm Beach at the District.
16 Q. Was that meeting, also, in December rather
17 than January?
18 A. It could have been.
19 Q. Let me show you an agenda and ask you if
20 that refreshes your recollection.
21 A. I guess it must have been in --
22 Q. Did you help or work with Hazen & Sawyer in
23 developing an agenda for Hazen & Sawyer's meeting
24 with the League economists?
25 A. No.
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1 Q. Did you work with people at the District,
2 Carl Woelche or anyone in developing an agenda for
3 the meeting with the League economists?
4 A. No.
5 MR. SAXE: Counsel, for clarification,
6 you had just showed the witness an
7 agenda. Is this the agenda you were
8 referring to asking whether Dr. Jones
9 had input into this agenda?
10 MS. STINSON: Well, my question
11 was not that specific. I only asked
12 him -- showed him the agenda to see if
13 it refreshes his recollection about
14 when he met.
15 MR. SAXE: So you're asking
16 generically whether Dr. Jones had any
17 input into -- when you say "agenda,"
18 do you mean a formal document, agenda
19 document; or do you mean just the set
20 of items that Hazen & Sawyer intended
21 to go into with Dr. Polopolus at the
22 meeting?
23 MS. STINSON: The latter.
24 MR. SAXE: Okay. You can answer
25 the question.
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1 A. No. As a matter of fact, I think the
2 agenda that you showed to me was not an agenda for
3 our meeting, but rather was an agenda that
4 Grace Johns showed us of the issues that she
5 intended to go over with Polopolus and Richardson in
6 the subsequent meeting with them.
7 Q. (By Ms. Stinson) Okay. My question was:
8 Did you assist her in developing what items she
9 should talk to the League economists about?
10 A. That was handed to us at our meeting; and
11 to the best of my knowledge, it wasn't revised.
12 MR. SAXE: Nap time.
13 MS. STINSON: Oh, let me go a little
14 more.
15 MR. SAXE: Do you want to go a
16 few more minutes before we break?
17 MS. STINSON: Actually let's break.
18 (WHEREUPON, there was discussion
19 off the record; and
20 Exhibit No. 16 was marked
21 for identification.)
22 Q. (By Ms. Stinson) I've handed you what's
23 been marked as Exhibit 16. Can you identify that.
24 A. Yes. I believe this is my handwriting, and
25 I think this is a page of notes that I made to
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1 myself while I was reviewing the one portion of the
2 SWIM plan. I think there's a section there called
3 "Funding Provisions" or something and I had gone to
4 that and opened it up just to try to inform myself
5 as to what the funding provisions of the plan were.
6 Q. Do you recall about when you made these
7 notes?
8 A. I don't have an exact recollection, no.
9 Q. Would it have been early on in the summer
10 or fall?
11 A. I'm going to say it's probably either
12 somewhere around maybe December or January.
13 Q. The comment that says, "can't charge an
14 owner for problem created by someone else," what
15 does that note relate to? Are you copying something
16 or paraphrasing something from somewhere else? Is
17 that your own comment?
18 A. That's my own comment, I believe; and I
19 think it's my own layman's attempt to paraphrase
20 what I understand the Marjory Stoneman Douglas Act
21 to say and that is, for the SWIM restoration
22 program -- and I hope I'm right about this -- that an
23 individual or farm or an entity is not to be charged
24 an amount that is greater than their contribution to
25 the problem.
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1 So I interpret that to mean you can't
2 charge the owner for the problem created by someone
3 else. The owner is to pay only that cost for
4 cleanup necessary and attributable to his
5 contribution.
6 I was just making notes to try to help
7 myself understand what the rule was.
8 Q. Have you made any analysis of what
9 contribution the various owners have made to the
10 problem?
11 A. That would be beyond my expertise, in
12 fact.
13 Q. Are you aware of any such analysis that has
14 been made?
15 A. I have had some conversations with people
16 in the area and have looked at some of the documents
17 that relate to that.
18 Q. What documents?
19 A. Well, the SWIM plan, itself. I have read
20 the engineering -- some of the engineering reports
21 that relate to the phosphorus pollution problem by
22 Bocher and others. I recall the Lynch report,
23 having seen it at one point early on, and then
24 Brown & Caldwell.
25 Q. Do those reports make any kind of
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1 allocation as to percentage of responsibility by
2 various entities?
3 A. Not that I recall. I think for the most
4 part, those reports relate to alternative methods of
5 reducing phosphorus concentrations in the runoff
6 water from the area coastal area, and I don't recall
7 any specific statements about who contributes what
8 or how much.
9 Q. Let me ask you to look at a document
10 entitled "The Florida Sugar Industry, Its Evolution
11 and Prospects," by Buzzanell, Lord & Brown.
12 A. Do you want this one back (indicating
13 document)?
14 Q. We'll put it in this stack.
15 A. (Witness complies.)
16 Q. Is that a document that you've relied on in
17 any of your work on the Everglades?
18 A. Yes. I've read this document. In fact, I
19 have used it in some of the work that I've done.
20 Q. At the top, is that your note?
21 A. I'm afraid it is.
22 Q. It says, "Kind of sloppy. Not as sharp as
23 a USDA publication should be."
24 What specifically are you referring to, if
25 you recall? What is sloppy about it?
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1 A. Specifically, I'm referring to the use of
2 the multiplier. I think there's a slight misuse in
3 the terminology when they use this multiplier.
4 If you'll read the section that starts up
5 in the second paragraph, "In recent years the value
6 of sugar processed in South Florida has been around
7 550 million annually, with the sales multiplier for
8 the industry estimated at 2.42, each $1 of sugar
9 shipped from South Florida generates $2.42 for the
10 local economy. When all multiplier effects are
11 considered, the sugar industry in South Florida
12 generates between 1.3 and 1.6 billion in total
13 income and creates 18,000 full-time equivalent jobs
14 in the State."
15 The 2.42 is, in fact, the State-level
16 multiplier. They are using it against the dollar
17 sales and says, "that's the impact in the local
18 economy." Assuming that they mean, "by local
19 economy," the four sugar growing counties in that
20 area, then that's a misuse. That should have said
21 for the State economy.
22 And then, secondly, they go on to say, "All
23 multiplier effects" -- "when all multiplier effects
24 are considered, the sugar industry in South Florida
25 generates between 1.3 and 1.6 billion in total
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1 income." I believe that should be total sales or
2 total output, not income.
3 There is a -- to be strictly correct -- "as
4 USDA normally insists on being through their review
5 process."
6 Q. Okay. So the 2.42 would be the effect on
7 the State as a whole rather than on those four
8 counties?
9 A. Right.
10 Q. What multipliers should have been used for
11 the South Florida --
12 A. For the local economy?
13 Q. Right. Do you recall?
14 A. I don't recall the specific number. It's
15 included in a report by Mulkey and Clouser. It's
16 not greatly different from that that was used by
17 Hazen & Sawyer in her report.
18 Q. Okay. The 1.3 and 1.6 billion, are you
19 telling me that those are state-level figures rather
20 than local economy figures?
21 A. I believe I'm correct in saying that they
22 are state-level figures, yes; and that they are not
23 income as we would normally use income in an
24 economic impact analysis or in an economic
25 analysis. They're the total value of sales.
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1 Q. Would the 18,000 full-time equivalent jobs
2 also be a statewide number then?
3 A. I think that's correct and consistent with
4 the estimates made by Mulkey & Clouser in their --
5 they did a study of the Florida sugar industry and
6 came up with estimates of their own.
7 Q. The little comment you have by that
8 paragraph, does that say, "incorrect"?
9 A. Yes.
10 Q. Is there anything else in this document
11 which you felt was sloppy?
12 A. I think that's the only thing that that
13 comment related to.
14 Q. Okay. Let me show you --
15 MS. STINSON: Let's get this marked.
16 (WHEREUPON, Exhibit No. 17
17 was marked for identification.)
18 Q. (By Ms. Stinson) Can you identify what's
19 been marked as Exhibit 17.
20 A. This is a -- I produced this and it's --
21 basically it's a cover page that I used when I sent
22 some materials to Grace relating to the work that I
23 had done on the Texas/New Mexico Pecos River water
24 dispute. I think I mentioned that earlier in the
25 testimony.
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1 Q. What was the information you sent her, and
2 can you tell me specifically how it would be
3 relevant or was relevant to your opinion to the
4 Everglades review?
5 A. It was an analysis. I really did two
6 things. One was -- the thing that Grace was looking
7 at and that we had discussed was the amount of the
8 economic impact that would reside within the local
9 area and how much would be -- would reside
10 elsewhere.
11 Q. When you say "local", do you mean
12 Palm Beach County as a whole or an area larger than
13 that? What is local?
14 A. I'm not real sure at that time that we had
15 defined a study area, specifically. So we were
16 talking South Florida or the general area of sugar
17 production.
18 And as we had discussed this, I had told
19 her about the analysis that I had done and prepared
20 for the Attorney General's Office to be used in the
21 rebuttal testimony on the case. It was never used
22 because the case was settled, but I still had it.
23 So I told her that I would send that to
24 her, and see if she could make any use of it.
25 Q. How did you determine in that case how much
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1 would be local and how much nonlocal impact?
2 A. I did two different things. One was for
3 the production side of New Mexico agriculture; the
4 other was for the household expenditure side.
5 The first one would relate to what we
6 normally call "indirect effects," and the latter to
7 "induced effects."
8 I took some budgets from the agriculture --
9 the predominant agricultural enterprise in
10 New Mexico that we were looking at that was used in
11 water, and that's, as I recall, is irrigated alfalfa
12 and simply looked at the budget, the inputs that
13 were used in the production process, how much was
14 used and what the cost of those were and went down
15 through and tried to classify those inputs into
16 whether they would be local or nonlocal.
17 Q. Whether they would be purchased locally or
18 not?
19 A. Yes. Some of those things -- some of those
20 you can do rather obviously. Labor, for example, is
21 usually thought of to be within the local study
22 area; some others as well, repairs and maintenance.
23 We don't, in normal operations, travel great
24 distances to get our vehicles worked on and so
25 forth. I was just trying to follow a system of
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1 common sense or logic that would lead me to be able
2 to classify those.
3 So what I did was actually identify those
4 that could be purchased elsewhere in my opinion.
5 And then I tried to investigate those further to see
6 where they might come from.
7 Q. How did you investigate it?
8 A. Mainly through a series of telephone calls
9 to find out what the source supply would be for
10 those inputs individually as you go through.
11 I was, of course, primarily concerned with
12 whether or not those inputs could be purchased in
13 Texas. I was not so concerned if they came from
14 California or Japan or Europe or wherever.
15 So I recall specifically for fertilizer,
16 for example, I made several calls to the Texas
17 Fertilizer Association and discovered that we don't
18 produce fertilizers that are used on alfalfa in
19 Texas.
20 So going through a series of those kinds of
21 investigations, item by item, I was able to come up
22 with some estimates of how much of a dollar's worth
23 of output by an alfalfa farm in Roswell, New Mexico,
24 might go back to Texas by way of purchased inputs.
25 Q. How did Grace Johns deal with that question
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1 in the Everglades?
2 A. She set out to try to refine the analysis
3 beyond what -- beyond just using secondary data
4 through using multipliers. She did a -- she sent
5 out a survey to suppliers; and she, also, sent out a
6 questionnaire, a survey, to sugar producers, sugar
7 growers and, I believe, also, vegetable growers to
8 try to get them to provide her with the inputs that
9 are used in production -- that would be on the
10 producer's questionnaire, what do they use and how
11 much. And I'd have to go back and consult the
12 questionnaire to see -- again, I don't recall
13 whether or not she asked them for the source of that
14 supply or not. She didn't get any response from
15 that.
16 Q. Did she get any response from the
17 suppliers?
18 A. I haven't seen the material that she got
19 back from the suppliers; but in a conversation over
20 the phone with her after she had sent it out, as I
21 recall, she did tell me that she had had some
22 response. The extent to which she used this in her
23 analysis, I don't know. I don't recall any direct
24 reference to a supplier survey in her report.
25 Q. But that would be an appropriate way to
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1 refine a basic RIMS multiplier analysis?
2 A. Yes. RIMS, theoretically as any -- this is
3 true, not just of RIMS, but of any secondary
4 database input, output model.
5 There is a problem with being able to --
6 they attempt to refine it as much as they can
7 through using some things called "regional purchase
8 coefficients" and other sources of local data that
9 they might have available.
10 However, because these models are somewhat
11 aggregated, there always exists a problem in those
12 multipliers, and the problem comes down very simply
13 to being an upward bias.
14 In other words, those multipliers are
15 generally higher than they would be if you had
16 the -- if she had been able to get the data from the
17 farmers, and if she had been able to get the data
18 from suppliers and develop multipliers from that,
19 then it should be more exact; and, in general, you'd
20 expect that multiplier to be somewhat less than what
21 you would get from using RIMS or M Plan or location
22 quotients -- which is one of my creations -- or any
23 other secondary -- I think that's pretty well
24 understood among economic impact analysts that
25 secondary data IO models do have that inherent
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1 problem.
2 Q. I don't quite understand why it is that
3 they should generally project more.
4 A. Well, the problem comes in in the fact that
5 you overlook what are referred to as
6 counterbalancing exports and imports from a region.
7 Let me -- can I use an example?
8 Q. Sure, Professor.
9 A. Can I use a non-Florida example?
10 Q. Sure.
11 A. Well, I'll use a Florida example.
12 Let's say we have a sector which there
13 probably was -- does one exist in RIMS, which is
14 called "transportation equipment manufacturer."
15 Okay. And that might include boats, airplanes,
16 automobiles, trucks, say those four items.
17 Now, let's say that South Florida is a big
18 boat builder, and they build a lot of boats and they
19 ship those all over the United States but they don't
20 build any cars or trucks.
21 Let's say they don't even build any cars or
22 trucks. Then, in South Florida, for each dollar for
23 every boat that goes out may be offset with a
24 dollar's worth of cars coming in. There's no way
25 using RIMS or the other secondary techniques to know
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1 that.
2 There's nobody that keeps up with
3 interstate -- well, I should not say nobody.
4 There's nobody that publishes -- that I know of --
5 this kind of trade data that could be looked at and
6 say, "Okay, we don't have boat sales of 5 million.
7 We actually have boat sales of 10 million and
8 automobile imports of 5 million."
9 So it gives you an inaccuracy in the data
10 and the tendency is to cause the multiplier to be
11 somewhat too high.
12 Q. They wouldn't just offset each other in the
13 multiplier as well?
14 A. They do offset each other and that is the
15 problem. That in itself is the problem. Because if
16 you look at the way in which multipliers are
17 computed or estimated, then you have to do a very --
18 imports are not a part of the matrix that you
19 analyze and invert in order to estimate the
20 multiplier. Okay.
21 So what you've done is inadvertently left
22 out some imports and left out some exports that
23 should be accounted for.
24 I do have a -- and I'm adding this just for
25 information. I do have a journal article in which a
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1 graduate student of mine and I attempted to explain
2 that problem.
3 Q. Tell me what that is.
4 A. It should be called "Estimation Bias and
5 Input/Output Multipliers Estimated from Secondary
6 Data."
7 Q. When was that published?
8 A. It's published sometime in the 70's, in
9 the -- it's in the "Canadian Journal of Agricultural
10 Economics."
11 (WHEREUPON, Exhibit No. 18
12 was marked for identification.)
13 Q. (By Ms. Stinson) I'm handing you an
14 exhibit marked No. 18. Can you identify that for
15 me.
16 A. Yes. This is a part of a correspondence
17 that I had with Bob Rosenberg, and it was
18 requested -- it was material that was put together at
19 his request.
20 Q. Did you get a response to this?
21 A. Yes. The response that I got was the --
22 Q. Mr. Hirschhorn's information?
23 A. -- Mr. Hirschhorn's information, yes.
24 Q. Go ahead.
25 A. Well, this is -- Bob Rosenberg had
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1 contacted me and asked me to put together what
2 information I would -- we would need to collect in
3 order to look at the difference between the tax levy
4 that would be assessed against the agriculture in
5 the EAA if value -- market value versus agriculture
6 use value.
7 Q. And was that response included in what
8 we've previously marked as 14?
9 A. I believe so, uh-huh. Yes, that's right.
10 Q. And did you use that information, then, in
11 developing Exhibit 8?
12 A. I used that information in estimating the
13 21 million dollars of what I call -- of one of the
14 subsidy numbers, yes. That's the source. This is
15 the process that led to the estimation of the
16 21 million dollars.
17 Q. Okay.
18 A. I don't remember what I call it. "Local
19 government taxes based on productivity."
20 Q. I don't know that we need to mark this.
21 Let me show you a document entitled,
22 "Loxahatchee National Wildlife Refuge."
23 Is that an index to some photographs?
24 A. Yes.
25 Q. Did you take the photographs?
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1 A. Yes.
2 Q. For what purpose?
3 A. We were visiting the Loxahatchee Wildlife
4 Refuge, and I just -- I had my camera along; and I
5 took pictures of the refuge, itself.
6 We also visited the proposed STA sites, and
7 this log is simply a documentation of -- what each
8 one of the photographs refers to.
9 Q. Was it your intent to use those photographs
10 in your work in any way?
11 A. I thought at the time that I might have
12 occasion to use them. As it turns out, I have not
13 used them in anything other than simply the general
14 visual image that they're giving me of the area, of
15 the STA's in the refuge.
16 Q. Earlier, Dr. Jones, you referred to a memo
17 you sent to Grace Johns regarding what the price
18 would be in the absence of world price constraints,
19 and you referred to a number of 14 to 16 cents per
20 pound.
21 MR. SAXE: Counsel, this is a
22 miscollated copy of the document that
23 was produced to you. It goes from
24 Bates Page DLJ000437 right to 439.
25 MR. BURGESS: That's all we got.
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1 MS. STINSON: Well, wait a
2 minute. Mine's different.
3 MR. BURGESS: That's all I got.
4 MR. SAXE: That's all you have,
5 maybe.
6 MR. BURGESS: That's all I got.
7 MR. SAXE: I have the original
8 one here. Do you want to mark this?
9 Is it your intent to --
10 MS. STINSON: Sure. Yeah.
11 MR. SAXE: No, I'm asking you,
12 not offering.
13 MS. STINSON: I do.
14 MR. SAXE: Because you can't mark
15 the original.
16 MS. STINSON: I can take my copy
17 out.
18 MR. BURGESS: I'll need a copy of
19 this.
20 MR. SAXE: The page that you have
21 stapled as a second page, is not part
22 of this document.
23 MR. BURGESS: All I have is what
24 you sent me or your culprit sent me.
25 MR. SAXE: Did you find the 438
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1 page?
2 MS. STINSON: Yeah. I mean, my
3 copy has a "438."
4 MR. SAXE: Okay.
5 MS. STINSON: Let's get this marked.
6 (WHEREUPON, Exhibit No. 19
7 was marked for identification.)
8 Q. (By Ms. Stinson) We'll go back to where we
9 were before the break, I guess.
10 Earlier today you had talked about a
11 document you prepared a memo to Grace Johns
12 analyzing the world price and suggesting that the
13 price without market constraints by the
14 industrialized countries, as I recall, would be
15 between 14 and 16 cents a pound.
16 Is Exhibit 19 that document which you
17 earlier referred to?
18 A. I believe this is the document that I sent
19 to Dr. Johns. If I said that those numbers were
20 included in the document, then I think I misspoke.
21 We -- this was part of the analysis that I
22 did of the historical price. Some of the other
23 documents that we've looked at relate to the models
24 that were run on projecting the prices after the
25 change. And, as I recall, my communication to her
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1 about the free market price was done verbally.
2 Q. You say "models were run projecting the
3 price," did you do that or is this in some other
4 work?
5 A. No. This is in the publications and
6 reports that I reviewed.
7 Q. Specifically, were there any publications
8 which refer to a price of 14 to 16 cents a pound?
9 A. I can't say specifically that any one of
10 those reports had exactly 14 to 16 cents in it. I
11 would say that my recollection is that all of them
12 found results from their analyses that were
13 consistent with that range in the prices for the
14 free world price or free market price.
15 Q. You may have answered this, but can you
16 tell me what articles I would look to, to get this
17 price range?
18 MR. SAXE: The witness did answer
19 that. I think it was quite a list of
20 documents. I don't know if you framed
21 the question exactly that way, so go
22 ahead.
23 A. What was your question?
24 Q. (By Ms. Stinson) What articles I would
25 look to, to support this conclusion of a
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1 14 to 16 cent price range?
2 A. I think I gave you those awhile ago, as
3 best I can recall, all of them. Do you want me to
4 give them to you again?
5 Q. If you would.
6 A. Okay. I recall the Knutson, Schmitz &
7 Earley article; there is a study by
8 Schmitz & Vercammon; I reviewed the study by
9 Rausser & Farrell; I reviewed a report that was
10 published by Buzzanell, Lord and perhaps some other
11 authors from the ERS Sugar & Sweetner Division.
12 Q. Is that the article we talked about just a
13 little while ago that you had the sloppy comment on,
14 or was there another one?
15 A. No. That was another one. That was
16 different, a different publication.
17 MR. SAXE: Objection to form.
18 MR. BURGESS: Well, that's what it
19 said.
20 MR. SAXE: It was not a sloppy
21 comment.
22 A. There was a -- I recall a Ph.D.
23 dissertation by -- I believe the young man's name
24 was Greer, Thomas Greer; and I think the
25 dissertation was out of Purdue.
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1 Q. (By Ms. Stinson) Is that as best you
2 recall the list?
3 A. That's all I recall at this moment. There
4 may be some others, but I think that's the list as I
5 recall.
6 Q. The Ph.D. dissertation, is that published
7 somewhere? If I was looking for it, how would I
8 find it?
9 A. You can ask for it from the -- I submitted
10 it.
11 Q. You submitted it?
12 A. You could get it through the Interagency
13 Library Loan, I suppose, from Purdue.
14 MR. SAXE: Off the record.
15 (WHEREUPON, there was discussion
16 off the record.)
17 Q. The 14 to 16 cent price range, which you
18 mentioned, is that's what's called the New York
19 market 14, price intended to be the New York market
20 price?
21 A. I don't believe -- I'm not sure you could
22 make that direct corollary between the two. One is
23 an actual reported price; the New York No. 14 is a
24 specific price for 96-degree of raw sugar, as I
25 understand it. It's got some very strict conditions
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1 around it.
2 These prices of the free trade price may or
3 may not be traded, may or may not be consistent with
4 all those, all those conditions. These are
5 estimates and projections from econometric models.
6 So I don't think you could make necessarily
7 that exact comparison.
8 Q. Are you saying, then, you can't compare the
9 existing New York market price with this projection
10 of 14 to 16 cents?
11 A. No. I think you can compare it. I just
12 think that under free trade conditions, we would
13 have some significantly different trading patterns,
14 but I believe that the projected free world prices
15 are still comparable to the historic U.S. prices
16 under the program.
17 Q. We won't mark this, but can you tell me
18 what the document is I've handed you that's called
19 "Impact of STA's, BMP's and $25 an acre assessment
20 on EAA Countries and Florida"?
21 A. No. That's probably a misprint that
22 probably should be "counties."
23 MS. STINSON: Does he know what it
24 is?
25 MR. SAXE: This is a part of a
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1 document. It is not a document.
2 THE WITNESS: Yeah. There's more
3 that goes with this.
4 MS. STINSON: Let me put the
5 entire -- for some reason in my copy
6 they were separate.
7 MR. SAXE: It's quite possible
8 that they've been miscollated or
9 misstapled.
10 MS. STINSON: I'll hand you this. If
11 you'll clip those together. Is that
12 what I just handed you, the rest of
13 the document?
14 THE WITNESS: No.
15 MS. STINSON: What else goes with
16 it?
17 THE WITNESS: I believe there
18 should be a cover letter to Mr. Saxe
19 and some number of paragraphs
20 explaining something about this
21 table.
22 MS. STINSON: Let me show you the
23 preceding Bates numbers.
24 THE WITNESS: Do you want these
25 clipped together? Is that what you're
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1 telling me?
2 MS. STINSON: Are the Bates
3 numbers -- do they go together? Are
4 they all part of the same document?
5 MR. SAXE: There's a missing --
6 THE WITNESS: The Bate numbers go
7 together, but they're not a part of
8 the document as I put it together.
9 MR. SAXE: Off the record.
10 (WHEREUPON, there was discussion
11 off the record.)
12 A. To the best of my recollection, there was a
13 letter by which I transmitted this to Mr. Saxe.
14 Q. (By Ms. Stinson) What is that document,
15 minus the cover letter?
16 A. By "what is it," do you mean what did I do
17 here?
18 Q. Yes.
19 A. This is my document. I prepared this. And
20 what I'm attempting to do here is to make a
21 comparison of the estimates that Hazen & Sawyer
22 reported with those that Dr. Polopolus presented to
23 the South Florida Water Management District, and
24 then to try to see if I could reconcile or find
25 consistency in Dr. Polopolus' estimates.
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1 Q. For what purpose did you develop this
2 document, and when was it developed, to the best you
3 recall?
4 A. This was developed soon after the funding
5 council meeting when Grace Johns gave the
6 Hazen & Sawyer's final report and Dr. Polopolus
7 appeared on that program, as well, and presented a
8 presentation, at which he said that they had
9 different estimates; and I was trying to see if I
10 could figure out the differences and so forth.
11 MR. BURGESS: Has the document been
12 marked?
13 MS. STINSON: No, not yet.
14 Q. (By Ms. Stinson) Let me show you what's
15 previously been marked as 6 and ask you if 6
16 contains perhaps even the identical wording that you
17 have in the text of the document you just described?
18 A. I believe that's correct. Let's see.
19 MR. SAXE: Counsel, I think that what
20 this might have been was a computer
21 file draft version of this document,
22 quite possibly. I don't believe it
23 had any other accompaniments when it
24 was produced.
25 THE WITNESS: And this one does
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1 have the "addressed to Mr. Saxe."
2 MS. STINSON: Does 6 also have
3 the chart on the back?
4 THE WITNESS: Yes, it does, I
5 believe.
6 MR. SAXE: For the record, the
7 document that's been referred to
8 appears to have been a draft of what
9 has been marked as Exhibit 6.
10 MS. STINSON: Okay.
11 Q. (By Ms. Stinson) You earlier referred to
12 an article by Knutson, Schmitz & Earley.
13 A. Yes.
14 Q. Is that article "Sugar Policy Alternatives
15 and Impacts, 1985 and Beyond"?
16 A. Yes.
17 Q. Do you know when that article was written?
18 I could not find the authorship date.
19 A. As I recall, there are references to the
20 year 1985.
21 Q. Okay.
22 (WHEREUPON, there was discussion
23 off the record.)
24 Q. (By Ms. Stinson) Dr. Jones, do you
25 consider yourself an expert on soil subsidence?
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1 A. No, I don't.
2 Q. Have you reviewed any proposals or analyses
3 for funding of the SWIM plan?
4 A. Not to my recollection. I've never seen
5 any. Other than, of course, the estimates that are
6 in the SWIM plan, itself, is the cost of STA's.
7 Q. But other than the SWIM plan, itself, which
8 just picks some sort of general categories, correct,
9 of STA's -- of EAA assessments, have you ever seen
10 any actual proposal for financing the projects?
11 A. The SWIM plan, as I recall, lays out what
12 they call "primary sources," in which it includes
13 the utility fees and assessments on agriculture.
14 Then it has some other -- I think the
15 heading is "Other Sources," which includes several
16 alternatives as to where the District might be able
17 to obtain funds.
18 So that's what I was referring to when I
19 said that I guess that could be interpreted as a
20 funding plan; but other than that, I have not seen
21 any other -- anything else to my recollection that
22 would go to the funding of the SWIM plan.
23 Q. In the report you presented to the board in
24 February as reflected in Exhibit 12, you assumed a
25 6.5 percent interest on bonds to be supported by
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1 assessments on the EAA, correct?
2 A. No, not exactly. I did assume a
3 6.5 percent interest rate on a 20-year bond. I made
4 no particular assumptions about what the bases of
5 support for retirement of those bonds would be.
6 As far as I know, that decision has not
7 been made; and so I didn't make any assumption as to
8 what the revenue base would be for those bonds.
9 Q. What are the possible revenue bases for
10 those bonds?
11 A. I have not looked into that. I would
12 assume that the South Florida Water Management
13 District sells bonds as a matter of course, and they
14 might use -- I'm sure that some of those are
15 supported by a revenue base.
16 Q. Do you know whether they have a revenue
17 base sufficient to allow them to support an
18 additional 314 million dollars in bonds?
19 A. I have not studied that and/or looked at
20 the entire revenue base of the District.
21 Q. Do you consider yourself an expert on bond
22 financing?
23 A. No. I buy a few from time to time.
24 Q. Would the 6.5 percent interest apply to
25 bonds which were not insurable?
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1 MR. SAXE: Counsel, you've just asked
2 the witness whether he considers
3 himself an expert in bond financing.
4 Do you intend to pursue a line of
5 questioning about the technicalities
6 of bond financing after he said no?
7 MS. STINSON: No. I'm simply
8 pursuing a line of questioning about
9 his choice of the 6.5 interest rate.
10 MR. SAXE: I don't see how your
11 question relates to the choice of the
12 6.5 interest rate.
13 Q. (By Ms. Stinson) Well, Dr. Jones, can you
14 answer my question?
15 MR. SAXE: Could you repeat the
16 question?
17 A. I don't know --
18 THE WITNESS: If you would, repeat it,
19 please, or read it back.
20 Q. (By Ms. Stinson) Let me back up. Upon
21 what is your choice of a 6.5 percent interest rate
22 based?
23 A. I'd say just general knowledge from
24 observing the current bond market, bonds that I buy,
25 bonds that I read about in the Wall Street Journal
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1 and so forth.
2 Q. Do you know whether that rate applies to
3 bonds which are insured or not insured?
4 A. The latest quota I had on insured bonds is
5 about 5 and three-quarters; but, no, I did not know
6 which -- which I would assume to be a comparable
7 type bond for the -- as the South Florida Water
8 Management District, not strictly comparable, but
9 generally comparable.
10 But I do not know if 6.5 percent would be
11 the precise percentage interest rate on an insured
12 or uninsured bond at this point for the South
13 Florida Water Management District.
14 Q. You indicated that your general knowledge --
15 to your general knowledge of 5.75 percent rate is
16 current for insured bonds.
17 Do you know from your general knowledge
18 what the rate is currently for uninsured bonds?
19 A. No, I don't.
20 Q. Well, have you made an assumption in
21 choosing the 6.5 percent rate as to whether or not
22 the bonds would be insured?
23 A. In choosing the 6.5 percent rate, we were
24 trying to obtain an estimate that would be
25 reasonable for the annual debt service for the size
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1 of the bonds that we understood that would need to
2 be sold towards the construction of STA's and
3 BMP's. And it was for the purpose of this
4 presentation to the board and nothing more.
5 We weren't trying to make a statement as to
6 whether or not that was the rate that should be or
7 would be appropriate for an insured or an uninsured
8 bond. I think in my presentation I made it clear
9 that this was an assumption and that's all it is.
10 Q. Do you know how the SWIM plan projects to
11 be financed?
12 A. They're to be financed, I would presume, by
13 the method as decided by the South Florida Water
14 Management District Funding Council and Board of
15 Directors.
16 Q. That decision has not been made yet; is
17 that correct?
18 A. To the best of my knowledge, it has not
19 been made.
20 Q. Is it possible to analyze the economic
21 impact of the SWIM plan without knowing how it is to
22 be financed and who is to be asked to pay for it?
23 A. I think it's possible to do a reasonable
24 advanced analysis of the SWIM plan for planning
25 purposes just as the board has asked Hazen & Sawyer
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1 to do and as we were asked to do in this case.
2 Q. To do that, must you make assumptions with
3 regard to how it will be financed?
4 A. To do what?
5 Q. To do an economic impact analysis of the
6 effect of the SWIM plan projects?
7 A. Well, the way that's typically done is --
8 in economic impact analysis is either one of two
9 ways. If you know what the financing plan is, then,
10 of course, you would put that into your analysis.
11 If you don't know, and the decision hasn't
12 been made yet, which is, I would say, most normally
13 the case, that we have to do economic analysis and
14 projections prior to all the decisions being made,
15 then the option is to look at some different
16 scenarios of the effects of a --
17 MR. SAXE: Excuse me. Off the
18 record.
19 (WHEREUPON, there was discussion
20 off the record.)
21 MS. STINSON: Would you read back his
22 last answer?
23 (WHEREUPON, the requested
24 portion of the record was read
25 by the court reporter.)
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1 Q. (By Ms. Stinson) Had you finished your
2 response, Dr. Jones?
3 A. Yes. Basically I was talking about the
4 second option in which we have to work prior to all
5 of the answers being made and that is that we
6 usually do scenarios, project -- make projections at
7 different levels of cost of the program or whatever
8 the case might be, different levels of impact.
9 Q. Has that been done in this case, a
10 development of different scenarios of financing the
11 SWIM plan?
12 A. In my opinion, that's what the board was
13 asking for when they asked Hazen & Sawyer to look at
14 economic impact projections at different assessment
15 levels. I believe she analyzed three or four
16 different levels, 10, 25, 50, and maybe 100. I'm
17 not sure about the 50, but she looked at the
18 assessment -- she looked at the economic impacts,
19 assuming that those possible levels of assessment
20 will be applied to sugar acreage and vegetable
21 acreage and other acreage within the agricultural
22 area of the EAA.
23 Q. Do you know at which of those levels the
24 entire plan would be funded?
25 A. Are you asking me what is the level of
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1 assessment that would be required to fund the entire
2 plan?
3 Q. Sort of. But let me ask it a different
4 way. If you assume, as Hazen & Sawyer did, that --
5 a $10 assessment level -- does Hazen & Sawyer also
6 assume that that's the full cost of funding the
7 projects in the SWIM plan?
8 A. I don't think that Hazen & Sawyer made an
9 assumption about that one way or the other.
10 Q. Would you not, then, have to -- for the
11 different scenarios, have a different scenario that
12 would entirely fund the plan, not just a piece of
13 it? So, for example --
14 A. You could. I wouldn't agree with you that
15 it would be absolutely necessary that you do that.
16 Q. Well, if the $10 assessment doesn't pay for
17 the whole cost, clearly the Water Management
18 District would have to look elsewhere for the
19 deficit, correct?
20 A. Correct.
21 Q. Has any assessment or analysis been done of
22 where the remaining funding would come from and what
23 economic effect that would have?
24 A. Not to my knowledge, no.
25 Q. Wouldn't that be necessary to do a complete
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1 economic impact assessment, have different funding
2 scenarios, each of which actually funded the
3 projects proposed?
4 A. Well, you know, it would depend on what
5 sources that you anticipate that you're going to go
6 to, as to whether or not you'd want to do a complete
7 economic analysis of each one of those alternative
8 sources.
9 Q. Is there any suggestion as to what those
10 alternative sources would be if the assessment does
11 not cover the entire cost of the project?
12 A. There are some -- there is some potential
13 sources listed in the SWIM document, which I assume
14 are considered potential when the SWIM document was
15 written.
16 Q. Are you saying, then, it is your opinion
17 that it's not necessary to look at the effect of
18 payment by these other sources?
19 A. It's my opinion that the SWIM plan is not
20 in and of itself requiring an economic impact
21 analysis of any kind.
22 Now, the board chose to fund a study to do
23 an economic impact analysis on the EAA of the SWIM
24 plan with varying scenarios or levels of assessment
25 on the EAA.
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1 Should the board choose to fund another
2 study to look at each and every alternative source
3 of funding and the impact of that on the entities
4 providing the funds, then I guess that would be
5 within their right to do so.
6 Q. What you're telling me, then, is that the
7 analysis requested and performed by Hazen & Sawyer
8 is not a complete economic impact assessment of the
9 SWIM plan, basically, but only of how particular
10 levels of assessment would affect the EAA?
11 A. What Hazen & Sawyer did was to do an
12 analysis of the implementation of the SWIM plan on
13 the EAA, correct; and beyond that, the secondary
14 effects on -- within the EAA, as well as the State of
15 Florida.
16 Q. That would -- that assumes that none of the
17 other funding sources, potential funding sources, if
18 they are, in fact, utilized, would have any effect
19 on the EAA? Is that true?
20 A. I don't think there's an explicit
21 assumption of that kind in the Hazen & Sawyer
22 report. That was not -- they were not asked -- the
23 company was not asked to address that in their
24 study; and as far as I know, I have not heard of any
25 other funding -- I don't have knowledge of other
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1 funding sources being put forth specifically.
2 Q. Well, in your analysis -- I forget, again,
3 what exhibit it is that you presented -- Exhibit 12,
4 you indicate that an assessment in the neighborhood
5 of $82, $84, something on that order, on the
6 harvested sugar land, assuming the vegetable and the
7 sod people pay their share as well, would fund the
8 plan, correct?
9 A. That is the estimate we presented to the
10 board, yes, assuming that the -- given all of the
11 assumptions that we made that the cost would be
12 approximately just above $60 an acre on all
13 acreage. If you want to look at it in terms of what
14 the assessment is per harvested acre, then that's
15 right, about $83.
16 Q. Given your conclusion, then, I would assume
17 you would agree that an assessment as proposed or as
18 analyzed in the Hazen & Sawyer report of $25 per
19 acre would not fully pay for the projects in the
20 SWIM plan? Would you agree with that?
21 A. I would agree with that. She also
22 analyzed, ran a scenario with an analysis of $100
23 per acre.
24 Q. You're right. Let's stick with 25.
25 A. You want to look at 25, okay.
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1 Q. Her conclusions regarding the impact of
2 that $25 assessment then, given that we know that
3 part of the plan -- I mean, part of the funding will
4 have to come from elsewhere, necessarily assumes
5 that the funding from elsewhere will not affect the
6 EAA; isn't that true?
7 A. No, I don't think it assumes that. She
8 didn't estimate those impacts.
9 Q. Okay. So --
10 A. Because she's estimating what she was asked
11 to estimate, and that is the impact on the EAA of a
12 $25 assessment. So I can't quite agree or
13 understand that that necessarily implies that there
14 is an assumption of no other impacts going on in the
15 EAA.
16 Q. Insofar as the assessment level does not
17 cover the entire costs of the SWIM plan, the
18 analysis may or may not be a complete analysis of
19 the economic impact of funding the SWIM plan or of
20 the SWIM plan on the EAA?
21 MR. SAXE: Could you repeat that
22 question or read it back?
23 (WHEREUPON, the requested
24 portion of the record was read
25 by the court reporter.)
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1 A. The criticism that you're putting forward,
2 I believe, could be made of any study, of any that
3 I've ever seen, at any point in time.
4 The only way that I know to judge whether
5 or not a study is complete or not complete, is to
6 ask the question, "Does it fulfill the objectives
7 that it's set out to do?"
8 Now, a study can be complete in that
9 regard; and, then, if you want to stand off to the
10 side and still criticize it because it hasn't
11 analyzed and made conclusions about something else,
12 that's always possible.
13 So I would not say it's an incomplete study
14 because my basis for evaluating the study is whether
15 or not it accomplished the objectives that it set
16 out to do and what was asked for in the RFP by the
17 board.
18 Q. (By Ms. Stinson) You have reviewed the
19 RFP?
20 A. Yes.
21 Q. Well, let me preface by saying that I am
22 not suggesting that Hazen & Sawyer did something
23 less than they were required to do under the RFP.
24 So with that preface, let me ask the
25 question: Assume that you wanted to do an economic
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1 impact assessment of the SWIM plan on the EAA.
2 Would you not have to look at the potential
3 scenarios for full funding of the SWIM plan as they
4 affect the EAA?
5 A. That certainly would be an appropriate --
6 in my opinion, would be one of the objectives or
7 purposes of the study that could be constructed.
8 I would have no problem with a study
9 constructed in such a way should the board, or
10 whoever is in charge, were to develop in that
11 regard.
12 Q. What you have told me is that the board
13 only requested an analysis of these varying levels
14 of assessment on the EAA and how that would affect --
15 A. To the best of my knowledge, that is
16 correct.
17 Q. And just a hypothetical: Should a decision
18 be made to fund the plan with a $25 per acre
19 assessment and an increas in ad valorem taxation,
20 the ad valorem taxation increase would also affect
21 the EAA; would that be true?
22 MR. SAXE: Objection to form.
23 A. I don't know. I think you're getting
24 into -- I think you're getting into some -- excuse
25 me.
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1 MR. SAXE: No. You can answer the
2 question if you understand what
3 Counsel means by "ad valorem
4 taxation," specifically with respect
5 to its affect on the EAA; but I don't
6 understand that.
7 A. Well, you know, I think we're getting out
8 into an area of uncertainties that I'm the person
9 not willing to go into. There can be almost, I
10 guess, an infinite number of legal institutions
11 established to allocate this cost.
12 One would be that -- as you suggest, that
13 the farmers have to pay the assessment, plus they
14 have to pay the ad valorem tax at some rate times
15 their Ag use value. It would not be un -- out of
16 the question, also, that they could be exempted from
17 paying any ad valorem taxes or other assessments
18 above the $25.
19 They could be asked to do -- we could, I
20 think, sit here for a long time and speculate about
21 different things that could come about in the
22 future; but I think that is a different degree of
23 uncertainty than we have at the present time when
24 we're looking at the SWIM plan and the
25 Hazen & Sawyer Report.
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1 MS. STINSON: I don't have any other
2 questions. Given the caveat, I want
3 to review the documents and may have a
4 couple in the morning.
5 MR. SAXE: Sounds good.
6 (WHEREUPON, at the hour of
7 6:00 P.M., the deposition was
8 concluded.)
9 * * *
10
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13
14
15
16
17
18
19
20
21
22
23
24
25
PARLIAMENTARY REPORTING OF FLORIDA, INC.
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1 SIGNATURE OF WITNESS
2 I, LONNIE L. JONES, Ph.D., solemnly swear or
3 affirm under the pains and penalties of perjury that
4 the foregoing pages contain a true and correct
5 transcript of the testimony given by me at the time
6 and place stated with the corrections, if any, and
7 the reasons therefor noted on a separate sheet of
8 paper and attached hereto, and that I am signing
9 this before a Notary Public.
10
11 ____________________________
LONNIE L. JONES, Ph.D.
12
13 STATE OF T E X A S *
14 COUNTY OF _______________ *
15 SUBSCRIBED AND SWORN TO BEFORE ME by
16 LONNIE L. JONES, Ph.D., on this, the
17 _______________ day of ________________, A.D.,
18 1993.
19
_____________________________
20 Notary Public, State of Texas
21
22
23 My Commission Expires: __________________________
24
25 Job 1SUGA.FLOR00/0385
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1 C O R R E C T I O N S T O T H E
2 D E P O S I T I O N O F
3 LONNIE L. JONES, Ph.D.
4 PAGE/LINE ** READS ** SHOULD READ ** REASON
5 __________________________________________________
6 __________________________________________________
7 __________________________________________________
8 __________________________________________________
9 __________________________________________________
10 __________________________________________________
11 __________________________________________________
12 __________________________________________________
13 __________________________________________________
14 __________________________________________________
15 __________________________________________________
16 __________________________________________________
17 __________________________________________________
18 __________________________________________________
19 __________________________________________________
20 __________________________________________________
21 __________________________________________________
22 __________________________________________________
23 __________________________________________________
24 ___________________________________
LONNIE L. JONES, Ph.D.
25 Job 1SUGA.FLOR00/0385
PARLIAMENTARY REPORTING OF FLORIDA, INC.
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1 STATE OF TEXAS *
2 COUNTY OF HARRIS *
3 I, LORI A. BELVIN, a Certified Shorthand
4 Reporter in and for the State of Texas, hereby
5 certify pursuant to the Texas Rules of Civil
6 Procedure and/or agreement of the parties present to
7 the following:
8 That this deposition transcript is a true record
9 of the proceedings held and the testimony given by
10 LONNIE L. JONES, Ph.D., the witness named herein, on
11 March 3, 1993, after said witness was duly sworn by
12 me.
13 CERTIFIED TO BY me in Houston, Harris County,
14 Texas, on this, the ______ day of ____________,
15 A.D., 1993.
16
17
18 __________________________________
LORI A. BELVIN
19 Certified Shorthand Reporter
Notary Public, The State of Texas
20 Cert. No.: 2572 Exp.: 12/31/93
21 LOONEY & COMPANY
8 Greenway Plaza, Suite 920
22 Houston, Texas 77046
(713) 621-8572
23
24
25 Job 1SUGA.FLOR00/0385
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1 STATE OF FLORIDA
DIVISION OF ADMINISTRATIVE HEARINGS
2
SUGAR CANE GROWERS COOPERATIVE OF)
3 FLORIDA, INC., ROTH FARMS, INC., )
and WEDGWORTH FARMS, INC., )
4 )
and )
5 )
FLORIDA SUGAR CANE LEAGUE, INC., )
6 UNITED STATES SUGAR CORPORATION )
and NEW HOPE SOUTH, INC., )
7 )
and )
8 )
FLORIDA FRUIT AND VEGETABLE )
9 ASSOCIATION, LEWIS POPE FARMS )
W.E. SCHLECHTER & SONS, INC., and)
10 HUNDLEY FARMS, INC., )
)
11 Petitioners, )
)
12 v. )
)
13 SOUTH FLORIDA WATER MANAGEMENT )
DISTRICT, )
14 )
Respondent, )
15 )
and )
16 )
MICCOSUKEE TRIBE OF INDIANS OF )
17 FLORIDA, the UNITED STATES OF )
AMERICA, FLORIDA DEPARTMENT )
18 OF ENVIRONMENTAL REGULATION, and )
FLORIDA WILDLIFE FEDERATION, )
19 )
Intervenors. )
20
---------------------------------------------------
21 REPORTER'S CERTIFICATE/FILING CERTIFICATE
DEPOSITION OF LONNIE L. JONES, Ph.D., VOLUME I
22 TAKEN ON MARCH 3, 1993
---------------------------------------------------
23
24 I, Lori A. Belvin, a Certified Shorthand
25 Reporter in and for the State of Texas, hereby
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1 certify pursuant to the Texas Rules of Civil
2 Procedure and/or agreement of the parties present to
3 the following:
4 That the deposition transcript is a
5 true record of the testimony given by LONNIE L.
6 JONES, Ph.D., the witness named herein, on
7 March 3, 1993, after said witness was duly
8 sworn/affirmed by me.
9 That $______________ is the charge for
10 the preparation of the completed deposition
11 transcript, and any copies of exhibits charged
12 to MS. DONNA H. STINSON, Attorney for the
13 Petitioners;
14 That the original signature page and
15 correction sheet were sent to MR. KEITH E. SAXE,
16 along with their ordered copy of the deposition
17 transcript, for examination and signature by the
18 witness and return to Looney & Company by
19 ____________________, 19__.
20 That the original transcript
21 ______ was/ ______ was not returned to the
22 deposition officer by the witness.
23 That the original deposition transcript,
24 or a copy thereof, together with copies of all
25 exhibits, was delivered on _________________ to
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1 MS. DONNA H. STINSON, Attorney for the
2 Petitioners;
3 That pursuant to the information made a
4 part of the record at the time said testimony was
5 taken, the following includes all parties of record:
6
7 MS. DONNA H. STINSON, Attorney for SUGAR CANE
GROWERS COOPERATIVE OF FLORIDA, INC., ET AL.;
8
MR. RICK J. BURGESS, Attorney for FLORIDA SUGAR
9 CANE LEAGUE, INC., ET AL.;
10 MR. KEITH E. SAXE, Attorney for UNITED STATES OF
AMERICA.
11
12 That a copy of this certification was
13 served on all parties shown herein.
14
15 CERTIFIED TO on this _________ day of
16 ________________, A.D., 1993.
17
18
19 _______________________________
LORI A. BELVIN
20 Certified Shorthand Reporter
The State of Texas
21 Cert. No.: 2572 Exp. Date: 12/31/93
22 LOONEY & COMPANY
8 Greenway Plaza, Suite 920
23 Houston, Texas 77046
(713) 621-8572
24
25 Job No. 1SUGA.FLOR00/0385
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1 DELIVERY ACKNOWLEDGMENT
JOB NO. 1SUGA.FLOR00/0385
2 STATE OF FLORIDA
DIVISION OF ADMINISTRATIVE HEARINGS
3
SUGAR CANE GROWERS COOPERATIVE OF)
4 FLORIDA, INC., et al. )
Petitioners, )
5 )
v. )
6 )
SOUTH FLORIDA WATER MANAGEMENT )
7 DISTRICT, )
)
8 Respondent, )
)
9 and )
)
10 MICCOSUKEE TRIBE OF INDIANS OF )
FLORIDA, et al. )
11 )
Intervenors. )
12 --------------------------------------------------
ORAL DEPOSITION OF LONNIE L. JONES, Ph.D., VOLUME I
13 TAKEN ON MARCH 3, 1993
--------------------------------------------------
14 MS. DONNA H. STINSON MR. KEITH E. SAXE
123 South Calhoun St. 601 Pennsylvania NW
15 P. O. Box 6526 Avenue NW
Tallahasee, FLA 32301 Room 879
16 Washington, D.C. 20004
17 MR. RICK J. BURGESS
One Biscayne Tower
18 Suite 3636
Two South Biscayne Boulevard
19 Miami, FLA 33131
20 I hereby acknowledge the receipt of a/an ___
original ___ copy of the following items (s)
21 pertaining to the above numbered and styled cause.
___ Deposition (s) ___ Sworn Statement (s)
22 ___ Certified Questions ___ CNA (s)
___ Affidavit (s) ___ Deposition Summary (s)
23 ___ Exhibits ___ Videotape (s)
___ Ascii Disk (s) ___ Minuscript (s)
24 ___ Signature Pg (s) ___ Correction Sheet (s)
___ Certification Pg (s) ___ Notice of Filing (s)
25 ___ Invoice (s) ___ Other:________________
By:_____________ Date:__________ Time:_________
PARLIAMENTARY REPORTING OF FLORIDA, INC.
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